Currency Market - a TAT FX & Foresight view
News & Insights
<blockquote>
<p>The AUD is looking to escape the grasps of a bearish trend that we have seen throughout this year: with the assistance of the weakening Greenback, and also what looks to be seen as a positive statement from RBA yesterday morning. </p>
</blockquote>
<p>The Australian Dollar had fallen more than 9% against the U.S. Dollar during the 10 months to the beginning of November - thanks to Reserve Bank of Australia interest rate policy, events then saw the currency correct higher. </p>
<p>A glimpse of a recovery in commodity prices and supportive global environment has pushed the AUD/USD back to the 0.72s.</p>
<p>It goes almost without saying the RBA held its cash rate at a record low of 1.5% again in November, citing below-target inflation. The bank wants to see the consumer price index rise sustainably above 2% before raising interest rates. </p>
<p>According to the RBA Governor, steady improvement in the economy and continued falls in unemployment will eventually lead to faster wage growth, which should also help lift inflation back within the 2% to 3% target band. </p>
<p>Australian inflation has spent most of the last five years below 2%, necessitating a steady pace of interest rate cuts to support the economy, which culminated in rates being cut to a record low in August 2016.</p>
<ul>
<li><strong>AUD/USD</strong></li>
</ul>
<p>The AUD/USD rate was quoted 0.30% higher at 0.7232 during early trading Tuesday - the 6th, while the Pound-to-Aussie rate was down 0.25% at 1.8059. The Aussie was higher against all other G10 currencies for the session too.</p>
<p>A daily close above the 0.7244 level would mean the Australian Dollar's 2018 downtrend has been broken in a decisive manner, which could enable the current correction to extend all the way back up to 0.7474.</p>
<blockquote>
<p>Foresight models continue to be more bearish then sell-side (smart-estimate) for AUD/USD. The projected rates are closer to 0.69-0.70 (~-0.8% to -3.2%) over the coming 12 months. Foresight projects over the 3 month period have very high accuracy, for instance the correlation between actual and forecast is over 90%.</p>
<p>Foresight Analysis: <strong>AUD/USD - bearish -0.8% to -3.2%</strong></p>
</blockquote>
<ul>
<li><strong>AUD/EUR</strong></li>
</ul>
<p>Despite continued tensions between Italy and the European Commission over budget negotiations, the EUR managed to crawl back most of its earlier session losses, ensuring only a modest decline against the AUD.</p>
<blockquote>
<p>Foresight Analysis: <strong>AUD/EUR - flat outlook</strong></p>
</blockquote>
<p><strong><img alt="" src="https://tat.capital/docs/uploads/2018/11/euraud.jpg " /></strong></p>
<ul>
<li><strong>AUD/GBP </strong></li>
</ul>
<p>The one exception to the broader trend was the GBP, which continued to rally on speculation of an imminent Brexit breakthrough. As long as the UK economy continues to hold up in the face of increasing Brexit uncertainty and political worries, this should encourage the GBP to return to a stronger footing. </p>
<blockquote>
<p>Foresight Analysis: <strong>AUD/GBP - slightly bullish 0.5% to 1.7%</strong></p>
</blockquote>
<p><strong><img alt="" src="https://tat.capital/docs/uploads/2018/11/gbpaud.jpg " /></strong></p>
<ul>
<li><strong>AUD/CNY</strong></li>
</ul>
<p>The AUD strength continues into early November, but whether or not this period of appreciation can continue, might actually be closely tied to the fortunes of CNY, where the outlook remains shaky.<br />
At present, a notable improvement in global investor sentiment has lifted Chinese stocks, the CNY and the AUD.</p>
<p>China is Australia's biggest export market; a stronger RMB increases Chinese corporate buying power, and makes Australian exports more affordable. This in turn increases import demand in China, bidding up AUD in the process. How long will it last, is the question!</p>
<blockquote>
<p>Foresight Analysis: <strong>AUD/CNY - bearish</strong></p>
</blockquote>
<p><strong><img alt="" src="https://tat.capital/docs/uploads/2018/11/cnyaud.jpg " /></strong></p>
<ul>
<li><strong>AUD/INR</strong></li>
</ul>
<p>Rupee has fallen in value, due to a widening current account deficit. The main culprit of this is the rise in oil prices over the past several months. India is a large importer of oil, and a higher oil<br />
price is a big negative for its current account. The worsening current account deficit has led to the rupee selling off strongly.</p>
<p>The Indian government has been taking action by restricting imports of non-essential goods, such as gold, and also allowing banks to raise debt capital from overseas. Yet, it has still continued to fall, and with the RBI keeping rates on hold at 6.5%, it will continue to put downward pressure on the INR.</p>
<blockquote>
<p>Foresight Analysis: <strong>AUD/INR - bullish</strong></p>
</blockquote>
<p><strong><img alt="" src="https://tat.capital/docs/uploads/2018/11/inraud.jpg " /></strong></p>
<p><strong>Major events/data this month: </strong></p>
<p><strong>⇒ </strong>Thursday 8, 2018</p>
<p>Feds Monetary Policy Statement - United States </p>
<p>Fed Interest Rate Decision - United States </p>
<p><strong>⇒ </strong>Friday 9, 2018</p>
<p>RBA Monetary Policy Statement - Australia</p>
<p>Gross Domestic Product (QoQ/MoM) - United Kingdom </p>
<p><strong>⇒ </strong>Wednesday 14, 2018</p>
<p>Gross Domestic Product (QoQ) - Germany </p>
<p>Core Consumer Price Index (YoY) - United Kingdom </p>
<p>Consumer Price Index (YoY) - United Kingdom </p>
<p>Gross Domestic Product s.a. (QoQ/YoY) - European Monetary Union</p>
<p>Consumer Price Index Ex Food & Energy (YoY) United States </p>
<p><strong>⇒ </strong>Thursday 15, 2018</p>
<p>Employment Change s.a. Australia </p>
<p>Participation Rate - Australia </p>
<p>Unemployment Rate s.a. - Australia </p>
<p>Retail Sales control group - United States </p>
<p>Retail Sales ex Autos (MoM) - United States </p>
<p><strong>⇒ </strong>Friday 16, 2018</p>
<p>Consumer Price Index - (YoY) / Core (YoY) - European Monetary Union</p>
<p><strong>⇒ </strong>Tuesday 20, 2018</p>
<p>RBA Meetings Minutes - Australia </p>
<p>BoJ Monetary Policy Statement - Japan</p>
<p><strong>⇒ </strong>Thursday 22, 2018</p>
<p>ECB Monetary Policy Meeting Accounts - European Monetary Union</p>
<p><strong>⇒ </strong>Friday 23, 2018</p>
<p>Retail Sales (MoM) - Canada </p>
<p>Consumer Price Index (YoY/MoM) - Canada </p>
<p>Bank of Canada Consumer Price Index Core (YoY/MoM) - Canada </p>
<p><strong>⇒ </strong>Wednesday 28, 2018</p>
<p>Gross Domestic Product Annualized - United States </p>
<p>Core Personal Consumption Expenditures (QoQ) - United States </p>
<p><strong>⇒ </strong>Thursday 29, 2018</p>
<p>Core Personal Consumption Expenditure - Price Index (YoY) - United States </p>
<p>FOMC Minutes - United States</p>
<p>Tokyo CPI ex Fresh Food (YoY) - Japan </p>
<p><strong>⇒ </strong>Friday 30, 2018</p>
<p>Consumer Price Index - Core (YoY) - European Monetary Union</p>
<p>Consumer Price Index (YoY) - European Monetary Union</p>
<p><strong>Find more about the Foresight <a href="https://tat.capital/docs/uploads/2018/11/Foresight currency market review-Nov2018.pdf" target="_blank">Currency Market review</a> & </strong><strong><a href="https://tat.capital/docs/uploads/2018/11/foresight fx report_30.09.2018.pdf" target="_blank">FX 30 Sep 18 Report</a>.</strong></p>
<p>Download as pdf:</p>
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