FYI | Jul 01 2013
Off The Forex Desk from PhillipCapital
Economic News & Releases
US markets closed the Financial year on a negative tone with the Dow falling 115 points or 0.76 % and the S&P500 ending the session down 0.42% at 1608. Volume was the second highest of the year, with about half the day's shares traded in the last 30 minutes. The VIX ended the week down 11% at 16.86. US 10 year bond yield closed at 2.48% with volatility marking a range from 2.46 to 2.55 as traders squared off books at quarter end.
The stronger USD was the dominant quarter end closing theme with continued talk of September ‘Tapering’. Traders will be watching the health of the Chinese manufacturing sector with a dismal number factored in as HSBC flash PMI came in at 48.3. The Japanese Economy could be showing expansion on release of the Tankin with China in contraction.
AUD/USD – Lower on Panda bears
The AUD finished down 14% over the last 3 months with any attempt at a change in direction, being met by a continued wave of exuberant sellers. The pair closed the financial year on a weak footing at 91.37 after hitting a new 33 month low of 91.11 after US Fed board member Stein reiterated a possibility of September tapering.
The RBA meets tomorrow and is expected to keep rates on Hold at 2.75% with around a 20% chance of a rate cut with the bookies chalking in NO CUT at a $1.10 favourite.
Technically the AUD looks bearish after closing below the 38.2% Fibonacci support on the monthly chart at 91.43. Chinese manufacturing PMI looks to set the tone later today, as continued concerns over the strength of the Emerging Goliaths manufacturing and stability of its Financial sector keeps traders ready once again keen to sell any rallies.
USD/JPY – 100 is in sight again
The USD has started the week slightly higher against the Yen and is again eyeing off the 100 Yen mark. The pair broke higher out of a week-long trading range that saw a symmetrical triangle. The breakout quickly saw the pair rise past the recent high of 98.72 and it would now take stronger than expected data due out this morning to put the brakes on this rally.
With more Fed talk of tapering over the weekend, it seems that the USD is poised for yet another strong start to the month, and given the BoJ cannot boast the same economic pick up, it seems unlikely that they will begin tapering their own record monetary stimulus any time soon. Look for further USD/JPY strength in the coming weeks.
XAU/USD – End of year short covering rally
Spot Gold staged a late short covering rally to end the year at 1234/oz, locking in the largest quarterly loss since modern trading started in the 70s. Silver rallied 6% as traders locked in profits from short bets.
Buy stops are lurking around 1244 for gold and 19.60 for silver.
Gold has continued to underperform falling 28% this year with that trend forecast to continue by the larger investment banks from Goldman’s to BNP Paribas. Next major support is at the 50% fib retracement on the 10 year at 1130.
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