Despite better than expected US retail sales data 0.8 pct versus 0.6 pct that indicated people are spending, Euro after briefly hitting new lows of the year 1.2995 in Europe, bounced back in New York session for couple of factors.
The slowdown in the Empire State business in New York area suggesting slow pace of growth in manufacturing sector and in anticipation that Spain’s bond yield weakening could lead to more and early bailout package for Euro-Mediterranean country. Another factor that could have helped Euro was rumor that a US investment bank was buying the currency to repatriate funds.
Well, it may be all over as Euro’s current strength should fizzle out because fundamentally once European problem pops out, it is never over in a short span of time. Spain still has a long way to go. ECB has reported that it has already sucked in large part of money in March. It has a tough task ahead as huge measure is required to maintain fiscal discipline.
Meanwhile, RBA has once again created doubt in the minds of investors by saying that it is prudent to wait for more data before adjusting policy. This is more sensible Central Bank approach because decision should be pro-active measure and should always taken in anticipation of future trend and not based on what happened in past.
But market always reacts on past happening and hence is always short lived. So until next month’s policy announcement AUD will now frequently come under selling pressure and weak data will exert pressure on the Australian currency. Keeping the global trend and Australian interest rate, I think weakening of inflationary pressure will strength the case of rate cut. AUD should top around 1.0350-55 and hold below 1.0385, a break of 1.0305 would see AUD hitting 1.0288
Gold @ $ 1650 = Strategy unchanged will sell Gold as long as it hold below $ 1658. Prefer selling around $ 1652-53. Pick you profit regularly to avail frequent selling opportunity support is at $ 1642, convincing break encourages for $ 1636
Euro @= 1.3115= Tough I suspect that we have seen the top and only break of 1.3128 will encourage for another test of 1.3145-50 zones. I will not hesitate to sell Euro as long as 1.3190 is protected. A break of 1.3065 should push Euro down to res-test 1.3010 or probably 1.2955
GBP @ = 1.5887= Cable could make another 20-25 pip surge, but they are preferred selling levels, as 1.5950 should hold. Looking for a dip to teat 1.5830-35 break ehre would push Cable down to 1.5780
UsD uP - GoLD DowN ApR 16-20