Forex daily analysis from FIBO Group

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12.12.2014 - Australian dollar headed for US 75 cents

The Australian dollar is under pressure today after weak Industrial production figures out of China and an Interview with RBA governor Glen Stevens where he said he would like to see the Australian currency finally settle at around US75.00 cents.

At 7.20pm (AEDT) the Australian dollar is trading at US82.72 cents after falling as low as US82.40 cents in early trade.

China's industrial production rose 7.2% year on year in November coming in below analysts’ expectations of 7.5% and down from the 7.7% increase in October confirming there are a few cracks appearing in the Chinese economy.

In a wide ranging Interview Stevens noted that the RBA was happy to see the Australian dollar at US85.00 cents a year ago but circumstances have changed and he noted that,

"It's quite likely that it the Australian dollar will a year from now be lower than it is today, on the basis of the facts that we presently have,"

“In terms of trade, while historically high we’re still falling further and faster than was a assumed a year back.”

“Which means that in a year from now the Aussie dollar will be lower than where it is at the moment”

Noting how low he would like to see the currency fall he mentioned that,

“On the basis of the facts that we presently have. And, yes, a year ago I said probably 85US cents was better than 95. And if I had to pick a figure now, I would say probably 75 is better than 85”.

Brushing off speculation of an Interest rate cut to solve the economy’s problem he noted that,

I don't think we see many people at all saying 'look, the cost of money is too high, or I can't get money'," "I don't think that's really the problem now."

 

[FIBOgroup]

15.12.2014 - Australian dollar under pressure awaiting RBA minutes

The Australian dollar came under pressure last week as more positive economic news out of the US sent the greenback soaring against most major currencies Including the Aussie adding more pressure on the US Federal Reserve to make a move on Interest rates sooner than later.

At Friday’s close the Australian dollar finished at US82.44 cents down from US83.11 cents the previous week.

At 6.18pm(AEDT) In todays trade the currency is trading slightly lower at US82.37 cents.

The more than 40% drop in oil prices this year also means falling petrol prices which is going to put more money in the pockets of American consumers noted analysts from Fibogroup.

This can only add to inflationary worries which in turn may force the Fed to make a move on Rates at some time in the nearest future to curb spending.

The final straw for the Aussie dollar last week came when consumer confidence in America rose to an eight year high as the latest Reuters/Michigan Consumer Sentiment Index was released to the market.

The number came in at 93.8 well above analysts’ expectations of 89.5 which sent the Australian dollar tumbling to finish off another horror week.

Another damper was the Industrial production figures from China which came in at 7.2% against expectations of 7.5% dragging down the price of Iron ore, Australia’s biggest commodity as well as the local currency.

The Australian dollar may come under further pressure as we head towards Tuesday’s RBA minutes meeting as Investors await the monetary policy statement to see if the bank agrees with a growing list of Analysts who are calling for an Interest rate cut to kick start the local economy.

 

[FIBOgroup]

16.12.2014 - Australian dollar under US82.00 cents

The Australian dollar is trading slightly higher after today’s RBA minutes meeting where the bank reiterated they would like to see a period of stability in Interest rates pushing aside speculation of a rate cut next year.

At 4.50pm (AEDT) the local currency is trading at US 82.26 after falling to a fresh four and a half year low of US81.99 cents earlier today and up from US82.12 cents yesterday.

A 16 hour siege in Sydney ended yesterday with three people dead including the hostage taker which undermined the Aussie dollar as well as a further fall in oil prices.

Westpac senior market strategist Imre Speizer noted that these two events pressured the Aussie dollar pushing it to lt’s lowest level since July 2010,

“Oil failed to hold on to overnight gains with Brent crude slipping back to Friday’s lows of $US56.50. Equities continue to move in tandem with oil initially opening higher before giving up the gains later in the day,” he said.

More worrying signs emerged for the Chinese economy today as the HSBC flash PMI for China was released to the market coming in slightly under analyst’s expectations. The latest number came in at 49.5 against a consensus of 50 with a number generally under 50 seen as a contraction.

The Australian dollar is expected to come under further pressure as we head into Wednesday’s Interest rate decision and monetary statement from the Federal Reserve. There is more evidence mounting that the Fed needs to move on rates and with this expectation it doesn’t hold well for the Australian dollar claim analysts at Fibogroup forex brokers.

 

[FIBOgroup]

17.12.2014 - Fears of default pressure the Australian dollar

The Australian dollar is sharply lower today after the Russian central bank drastically lifted interest rates in order to starve of a further collapse of the rouble reviving fears of their last default in 1998.

At 6.10pm (AEDT) the Australian dollar is trading at US81.55 cents down from US82.44 cents in yesterday’s trade.

Russia’s move to lift interest rates by 650 basis points to 17% was seen as a desperate measure to save the rouble and the currency initially rallied more than 10% after the announcement. The good news however proved to be short lived, as traders digested the news which sent the currency tumbling again to over 80 per US dollar before settling at around 72, after Russia’s finance minister denied speculation that they were considering currency controls as an added protection measure.

The rule would have banned the Russian people form converting roubles into US dollars and placed restrictions on money leaving the country.

The Russian currency has now lost over 50% of its value since the start of the year.

Michal Dybula, from BNP Paribas noted that. “A large-scale run on deposits, once under way, would make capital controls pretty much unavoidable,” and that that “the authorities may start by forcing state-controlled companies to sell foreign assets and repatriate funds”.

 

[FIBOgroup]

18.12.2014 - Australian dollar pressured as US rate hike looms

The Australian dollar hit another fresh four year low yesterday after a change of tone from the US Federal Reserve indicating that the central bank may lift interest rates in April of next year.

At 4.30pm (AEDT) the Australian dollar is trading at US81.32 cents after falling as low as US81.06 cents in yesterday’s trade.

Since the beginning of the year the Fed has taken the stance that rates will be on hold for "considerable time" after the end of their stimulus program they began several years back to kick start the economy.

They pointed to the employment market and Inflation by noting,

“if incoming information indicates faster progress toward the committee's employment and inflation objectives than the committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated,”

The unemployment rate in the US stands at 5.9%, its lowest level in 12 years.

When pressed on the exact timing of an Interest rate rise, and what she meant by a couple, Fed Chair Janet Yellen told a news conference "So, a "couple," I believe, the dictionary probably says a "couple means two” Which now has analysts pricing in a rate hike in April after two more Fed meetings..

CPI numbers from the US came in at 1.7% yesterday against analysts’ expectations of 1.6% and well below the Fed’s target of 2%.

“This may be one of the reasons for the Federal Reserve to hold off lifting rates a little longer if Inflation continues to underperform” noted analysts from Fibogroup forex brokers

“If the oil price continues to drift lower this may also have an impact on the rate decision as consumers will have more money in their pockets at the end of the day which means less pressure on Inflation”

 

[FIBOgroup]

19.12.2014 - Australian dollar to continue it's downward spiral

The Australian dollar is trading higher today bouncing off a fresh four and a half year low from yesterday’s trade, as the US looks set to move on Interest rates early next year.

At 7.15pm (AEDT) the Australian dollar is trading at US81.66 cents after falling as low as US81.07 cents in yesterday is trading.

Citing comments from Fed president Janet Yellen, analysts now predict that the US central bank will lift rates in April 2015 from their record lows.

Yellen also mentioned that she is prepared to let the unemployment rate fall from its current rate 5.8% to as low as 5% which should help push the Inflation rate in the US to the bank’s target rate of 2%.

The Australian dollar will find strong resistance at US82.00 cents as trader’s book in profits for the weekend claim analysts from Fibogroup.

We expect the currency to find strong support around the US80.50 cents level as we head into Christmas.

The Australian dollar is expected to keep falling next year towards the RBA’s preferred level of US75.00 cents as unemployment rises and the potential for an interest rate cut in Australia weighs on the currency.

 

[FIBOgroup]

22.12.2014 - Australian dollar in tight range

The Australian dollar is trading in a tight range today after last week’s US Federal Reserve meeting and as traders get ready for the holiday season.

AT 7.10pm (AEDT) the local currency is trading at US81.48 cents up form US81.28 cents on Friday.

The Aussie dollar has now fallen more than 10% in the last 6 months as weak commodity prices and a recovering US economy including the possibility of an Interest rise has put pressure on the currency.

A growing number of Analysts are now jumping on board and predicting the Australian dollar is headed for around US75 cents next year as a slowdown in China and further falls in the Iron ore price, Australia’s biggest export drag down the local economy.

A report from the department of Industry predicted that iron ore prices would fall to around US$63 a tonne and noted,

"The current market oversupply is expected to prevail through the start of 2015 in response to a likely ongoing cyclical downturn in China's housing sector," the report said. "More of China's production is expected to exit the market, particularly over the northern winter, when operating costs typically rise, although a longer period of even lower iron ore prices may be required than previously expected to push supply out of the market."

The sharp decline in the Australian dollar however is a boom for some sectors of Australia’s economy such as tourism, manufacturing and retail sales as the local population snaps up imported goods at cheaper prices in the lead up to Christmas.

 

[FIBOgroup]

23.12.2014 - Australian dollar below psychological US81.00 cents

The Australian dollar has fallen through the psychological US81.00 cents barrier, as a fall in key commodity prices such as oil and the local export Iron ore weighed on the currency.

At 5.47pm (AEDT) the Australian dollar is trading at US80.98 cents after falling to as low as US80.87 cents a little earlier in the day.

Iron ore fell overnight to $US67.90 a tonne, and Brent Crude oil dropped more than 2% towards the $US60.00 a barrel mark.

IG market strategist Stan Shamu said iron ore and oil stocks had jumped quite a bit over the last few days but today the rally ran out of steam,

'We've seen a pullback in iron ore and crude oil,' Mr Shamu said.

'That's the main source of the weakness that we're seeing today.'

Without the presence of local data, the Aussie dollar may come under further pressure today in the lead up to the release of the latest Durable goods report and quarterly GDP numbers from the US.

The consensus for the durable goods figure is a number of 1.8% well up on last month’s figure of 0.4%, and with the momentum lying with the US dollar over the last few sessions we may see the American currency continue to strengthen as the day unfolds.

 

[FIBOgroup]

24.12.2014 - Australian dollar under fire from strong US GDP data

The Australian dollar sunk to a fresh four year low overnight after strong GDP data from the US yesterday added more pressure on the US Federal reserve to lift Interest rates early next year.

At 7.30pm (AEDT) the Australian dollar was fetching US81.11 cents after reaching a new 4.5 year low of US80.87 cents yesterday.
US gross domestic product increased 5% between July and September, the Commerce Department said, coming in well ahead of analysts’ expectations of 4.3%.

“The picture out of the US just keeps getting better and better” noted analysts at Fibogroup forex brokers.

“With numbers like these the fed will have to act soon on rates which can only add to the woes of the Australian dollar”

A growing number of analysts are also predicting a rate cut in Australia next year as unemployment grows and Inflation slides which will reduce the Interest rate gap between the US and Australia and lessen the attractiveness of the carry trade.

Interest rates in Australia currently stand at 2.5% while in the US they stand at 0.25%.

Addressing concerns about a slowdown in China and the effects on the Australian dollar Lee Hardman, an economist at Bank of Tokyo-Mitsubishi UFJ in London noted,
"It's been a weak year for the Australian dollar, reflecting the slowing growth outlook for China, which has resulted in a further deterioration of Australia's terms of trade," Lee Hardman, an economist at Bank of Tokyo-Mitsubishi UFJ in London.

"We still think there's scope for further downside going forward."

 

[FIBOgroup]

29.12.2014 - Australian dollar up in light trade

The Australian dollar is trading slightly higher today following on from the strong finish of the local sharemarket.

At 7.10pm (AEDT) the Aussie dollar is trading at US81.37 cents up from US81.20 cents last week.

The ASX 200 rose 1.5 per cent to close at 5,474 boosted by strong gains in the resource sector and a slight rise in the iron ore price to $US66.70 a tonne.

CMC markets analyst Michael McCarthy noted that trading had been volatile amid weak volumes but the market gathered momentum as the day went on,

"The market has gone from strength to strength today and the big surprise is the resources stocks," Mr McCarthy said.

"Although we did see pressure on energy stocks at the open, both Rio and BHP opened in the green and headed high very quickly."

Easy Forex senior dealer Francisco Solar said the Australian dollar benefited from improved risk appetite after the four-day Christmas break.

"There was a positive end to the session which reflected on the Aussie dollar," he said.

"There seems to be a bit of a risk appetite, or risk seeking behavior in what has been a session characterized by no catalyst really so the Aussie in that environment tends to do quite OK."

 

[FIBOgroup]

30.12.2014 - Australian dollar up despite uncertainty in Europe

The Australian dollar is holding up pretty well today even as a looming presidential election that was triggered in Greece yesterday threatens to create instability in the Eurozone.

At 7.16pm (AEDT) the Australian dollar is trading at US81.66 cents up from US81.30 cents at yesterdays close.

Greece's government was forced to call early national elections yesterday after failing to elect a president raising concerns of a victory for the opposition party who are in favor of making changes to the austerity measures put in place to help Greece deal with the financial crisis.

The left-wing opposition Syriza party, which has a slight lead in the opinion polls, would like to change the terms of the bailout deal which is seen as crucial to Greece’s long term financial health.

The Athens stock market plunged more than 11% immediately after the news before recovering to close the day out down around 4%.

“The news is seen as negative for the Australian dollar” noted analysts from Fibogroup forex brokers.

“The repercussions will be felt throughout the Eurozone as well as the global financial system as a whole which will only put more pressure on riskier currencies such as the Aussie dollar and may help strengthen the US dollar as Investors seek safety”.

 

[FIBOgroup]

31.12.2014 - Australian dollar gets a temporary reprieve

The Australian dollar is trading higher today after data out of the US yesterday missed analysts’ expectations and manufacturing numbers out of China came in slightly above consensus.

At 9.20pm (AEDT) the local currency is trading at US81.90 cents up from US81.80 cents in yesterday’s trade.

The Consumer Confidence Index from the US came in at 92.6 yesterday which was slightly below expectations of 93 providing some support for the Aussie dollar as the market reacted to the disappointing news.

The HSBC Manufacturing Purchasing Managers Index (PMI) out of China came in at 49.6 which was just above the markets expectations of 49.5 but down from 50 in last month’s reading.

A number less than 50 generally shows a contraction in the economy.

“The Australian dollar received a boost from underperforming US data yesterday which pushed it towards the US82.00 cents level” noted analysts from Fibogroup forex brokers.

“We believe this is only a temporary reprieve and the currency will continue it’s down trend later today or at the start of the New Year”.

The last test of the year for the Aussie dollar will be a round of news due out of the US later today including continuing jobless claims, pending home sales and the Chicago Purchasing Managers Index which may dictate whether the Australian dollar sinks or swims as we round out the year.

 

[FIBOgroup]

05.01.2015 - Australian dollar hits record lows

The Australian dollar touched a fresh 5.5 year low in today’s trade as the US dollar continues to rally and fears of a slowdown in China this year weighed on the currency.

The Aussie dollar briefly hit US80.35 cents today, its lowest level since July 2009.

The US Federal Reserve is widely expected to lift Interest rates this year with some analysts predicting that the first move will come in April which is much sooner than most predicted last year.

“The Australian dollar will come under further pressure as we move towards the first expected rate increase in the US” noted analysts from Fibogroup.

“The market is already starting to price in a rate hike which will keep a cloud hanging over the Aussie currency”.

“On top of that there is the potential for an Interest rate cut in Australia sometime this year which only adds fuel to the fire”.

Easy Forex currency dealer Ricky Liu said weak commodity prices and the overall strength of the US economy were likely to pressure the Australian dollar in 2015.

"US dollar strength has continued in anticipation of an interest rate hike by the US Federal Reserve, so we're getting a weaker Australian dollar," Mr Liu said.

"Commodity prices have continued to fall off and China is slowing down which also affects the Australian economy”.

"Australia is slowly going toward a recession."

 

[FIBOgroup]

06.01.2015 - Australian dollar up on trade data, Chinese PMI

The Australian dollar has pushed higher today after a better than expected trade deficit and some positive numbers out of China.

At 5.45pm (AEDT) the local currency is trading at US81.54 cents after hitting a fresh 5.5 year low of US80.34 in yesterday’s trade.

Australia’s budget deficit widened to $925 million in November which was substantially below analysts’ expectations of $2 billion, helping to offset the recent decline in key commodity prices.

National Australia Bank senior economist Spiros Papadopoulos said although the numbers were better than expected, the deficit had widened since October, reflecting the downward trend in Australia's overall terms of trade.

"It's the same old story where we've got deteriorating values but the volume side of things still looks good and is still pointing to a good contribution to economic growth this year," Mr Papadopoulos said.

"We're still seeing good volumes growth coming through, but the price impact has obviously been quite significant."

The Aussie dollar also received a boost after the Chinese services sector had its biggest jump in 3 months in December, underpinned by new orders and offsetting a recent string of disappointing economic news.

China's services sector grew at its fastest pace in three months in December as new orders remained strong, a private survey showed, an encouraging sign of strength even as manufacturing activity slows and the property market softens.

The HSBC Purchasing Managers' Index (PMI) jumped to 53.4 last month from November's 53.0, significantly above the all important 50 level.

A level in the index below 50 is generally seen as a contraction.

“This is welcoming news for China at a time where fears of a slowdown are creeping into the economy” noted analysts at Fibogroup forex brokers

“It may also help cover for the recent and expected future decline in the housing market”

 

[FIBOgroup]

07.01.2015 -Disappointing data from the US fails to save the Australian dollar

Disappointing data from the US was not enough to save the Australian dollar which is trading back below the US81.00 cents mark today.

At 9.10pm (AEDT) the local currency is trading at US 80.61 cents heading back down towards a new 5.5 year low.

The ISM Non-Manufacturing Index from the US came in at 56.2 significantly lower than analysts’ expectations of 58.2 and well down on Novembers reading of 59.3.

Anthony Nieves, who monitors the survey for the ISM noted,

“There was a little bit of moderation, but overall it’s a strong report,” Economists weren’t worried about the decline since the index remains above 50.

“If the PMI’s level out at relatively high readings, it suggests that the economy continues to do well,” wrote economists at Jefferies in a research note. “It does not suggest that the economy is slowing.”

Analysts from Fibogroup forex brokers see this as worrying sign for the Aussie dollar with further falls expected in the nearest future.

“Traders expected some support to develop and the Australian dollar to hold above the US81.00 cents level after the disappointing data from the US”

“It just goes to show that all the momentum is with the US dollar at the moment so further falls in the Aussie dollar are likely in the nearest future”.

Later today the market will await the latest FOMC minutes meeting from the US where the focus will be on the timing of an interest rate rise and depending on the tone of the Fed we could see the Australian dollar come under further pressure.

 

[FIBOgroup]

08.01.2015 - Australian dollar bounces on strong construction data

The Australian dollar is trading higher today after the release of the latest building approval figures hit the market well above analysts’ expectations.

At 8,00pm (AEDT) the Australian dollar is trading at US81.07 cents up from US80.77 cents in yesterday’s trade.

Building permits for the construction of new homes rose 7.5 % in November, which was well above most analysts’ expectations of a 3% decline, clearly showing the real estate market in Australia is still powering ahead.

“These numbers are a welcome relief for the Aussie dollar at a time when the currency doesn’t have much going for it” noted analysts from Fibogroup forex brokers.

“The real estate market and construction Industry as a whole continues to perform well in Australia which may help cushion further falls in the Australian dollar”.

All eyes will be on tomorrow’s release of retail sales data out of Australia and numbers out of China where a break down below the US80.00 cents mark is not out of the question if the data fails to impress.

Growth in China is a little worrying at the moment so investors will be looking for some strong CPI numbers tomorrow to alleviate those fears.

 

[FIBOgroup]

09.01.2015 - Australian dollar steady ahead of key US jobs data

The Australian dollar is stable today, holding up pretty well after the release of disappointing local retail sales data.

At 8.23pm (AEDT) the Australian dollar is trading at US 81.23 cents virtually unchanged from yesterday’s close of US81.22 cents.

Retail sales in Australia rose by 0.1% in November missing analysts forecasts of a 0.2% rise which was disappointing considering the run up to Christmas and the New Year period where shoppers usually like to open there wallets.

“The unemployment factor is starting weigh on consumers’ minds” noted analysts from Fibogroup forex brokers

“The Jobless rate in Australia is sitting at 6.3%, its highest level in 12 years and this has to have people a little nervous”.

They also mentioned that one of the effects of a falling Australian dollar is a lower exchange rate which is connected with purchases of goods from overseas,

The Australian dollar is down more than 15% this year against its US counterpart which definitely cuts in to the purchasing power of consumers as most imported goods are priced in US dollars”.

Later today the market will await the release of key employment data as the latest non-farm payrolls report from the US hits the market.

Unemployment in the US currently sits at 5.8%, its lowest level in 6 years and was one of the stellar economic performers for the American economy in 2014.

There will be a lot of hype in the lead up to the release of the non-farm payrolls with the US dollar likely to strengthen against most major currencies if the data lives up to expectations.

 

[FIBOgroup]

12.01.2015 - Australian dollar up on US wage growth

The Australian dollar has jumped above the US82.00 cents level as wage growth in the US put into question the strength of the recovery in the US economy.

At 9am AEDT the local currency is trading at US82.06 cents, up from US81.40 cents on Friday.

The non-farm payrolls showed employment rose more than forecast adding 252,000 jobs in December bringing down the jobless rate to 5.6 percent, a Labor Department report showed.

But the job numbers were deceiving as wages rose only 1.7 % from a year ago, barely keeping up with inflation and well below analysts’ forecasts of 2.2% growth.

Emphasizing the Importance of wage growth in the US and just how important it is to the recovery of the US economy, Janus Capital Group’s Bill Gross who used to run the world’s biggest bond fund before joining Janus in September said in a radio interview “It’s about wages”

“The market is conflicted over what the Fed will do.’

Mentioning the problem of job creation and a falling unemployment rate coupled with wages that are below the Fed’s inflation target he noted,

‘‘We are creating a lot of jobs, part of it may be part-time. The creation of jobs is one thing, the creation of wages is another. Minus 0.2 percent in the month and a 1.7 percent annual hourly increase, just isn’t enough to sustain a U.S. economy.”

 

[FIBOgroup]

13.01.2015 - Australian dollar up on strong Chinese data

The Australian dollar is making a run back towards the US82.00 cents level today after strong data out of China provided a boost for the local currency

At 7.19pm (AEDT) the Aussie dollar was trading US81.81 cents at up from in US81.56 cents yesterday’s trade

Chinese exports rose 9.7 % in December to US$227.5 billion, coming in much higher than analysts’ expectations of a 4.7% rise while imports declined further than expected coming in at -2.4% against a market consensus of -6.6%

With the US on the recovery trail, we may see the Chinese export market continue to perform well according to Julian Evans-Pritchard of Capital Economics who noted,

“Looking ahead, although the global economy remains fragile we nonetheless expect growth in many of China’s key export markets, such as the US, to stage a slight recovery this year, which should provide support to Chinese exports,”.

These numbers are good news for the Australian dollar as the local currency has been weighed down by it’s own export market and in particular the lack of demand for iron ore, which has fallen sharply over the past year.

If the Chinese import market can hold up we may see a revival in demand for Australia’s biggest commodity which may provide some support to the Australian dollar.

 

[FIBOgroup]

14.01.2015 - Australian dollar under fire as copper tumbles

The Australian dollar is trading lower today after a sharp decline in copper prices overnight pressured the currency.

At 11.09pm (AEDT) the Australian dollar is trading at US81.25 cents down from US81.65 cents in yesterday’s trade.

Copper, Australia’s fifth biggest export fell around 6% to $2.49 a pound, a level not seen since 2009 as global demand for the commodity, especially from China remains uncertain.

The price of copper has held up pretty well considering the drop in other key commodities such as oil and Iron ore, Australia’s biggest export, but looking forward we may see further falls according to Ivan Szpakowski, an analyst at Citigroup Inc who noted,

“People have seen oil prices decline so much and now they’re targeting other commodities. Copper is falling faster than most other commodities because it’s the one that is played by the macro investors and by people who are looking at the broader picture rather than commodity fundamentals.”

One of the disappointing stories in the Australian economy over the last year has been the rising unemployment rate which now sits at a 12 year high of 6,3%.

The sharp fall in copper prices is starting to filter through to the job market with gold and copper mining company PanAust announcing plans to cut 182 jobs from its workforce as part of a business review due to a slump in copper prices.

“This is bad news for the Aussie dollar and the Australian economy as a whole” noted analysts at Fibogroup forex brokers

“As commodity prices like Iron ore and copper fall further as most analysts predict we can only expect further job losses in the mining sector which in turn will put more downward pressure on the Australian dollar”.