The
Australian dollar
was under pressure early on Tuesday, initially stronger than projected Retail Sales which increased by 0.5% in October but were lower than 0.9% advance the previous month could support the currency. However, next release on Current Account showed that deficit widened more than estimated in the third quarter. Furthermore, the Reserve Bank of Australia maintained its cash rate unchanged at 2.50% but reiterated in its monetary media release that despite the Australian dollar being lower than earlier in the year still remains “uncomfortably high” adding to selling weight. The
AUDUSD
was squeezed at a downside hurdle in the recent trading at a 3-month low at 0.9054 which contained downside bias. Our view is that selling pressure would eventually breach that support and induce prices towards more than 3-year trough at 0.8846.
AUDUSD
The
US dollar against a basket of
major currencies strengthened on yesterday trading and continued overnight with the
US dollar index
climbing to 80.96, underpinned by stronger than forecasted US Manufacturing PMI as well as shining US ISM Manufacturing PMI on yesterday evening. In addition we saw the US dollar index rising by 2.20% since end of October from 79.00 to 80.80, on asset tapering expectations and growth forecasts. For December US Non-Farm Payrolls will be major factor on Fed decision on the timing of partially unwinding the $85 billion monthly asset purchases. Therefore should the NFP for November rise above 200K then speculation would substantially raise greenback value.
Elsewhere, major currency pairs are at extreme levels, like the
USDJPY
reaching as high as 103.35 on Tuesday which is near 5-year high at 103.72 where above that the pair could print fresh highs. Our expectation is that 5-year high at 103.72 would contain uptrend in the medium term and is likely for us to see a corrective dip before retesting 103.72. The
British pound
has also rose to more than 2-year peak against the greenback at 1.6440 on optimistic expectations for growth as well as on speculation that central bank policy would soon shift.
Concerning calendar events, there are not so important releases for today after Australian RBA. Market participants are mainly wary on following days’ major events before that though we are alerted on Wednesday Asian session for AUD GDP data since it is likely to impact trading.
