Weekly Analysis and Recommendation: The AUD/USD added 6 points to close the week above the 70 level as traders breathed a sigh of relief after oil prices
The AUD/USD added 6 points to close the week above the 70 level as traders breathed a sigh of relief after oil prices gained helping the global commodities market and commodity linked currencies. The Aussie is trading at 0.7006. The Australian dollar has closed higher after Europe’s central bank bolstered global risk sentiment with hints of further possible economic stimulus.
ECB president Mario Draghi said the central bank would review its monetary policy stance as early as March. This has increased prospects of further economic stimulus in Europe, Westpac senior currency strategist Sean Callow said. He said as a result, equity markets rallied on improved global sentiment.
“The Aussie dollar is definitely benefiting from a more upbeat global mood following the bounce in European, US and local equities,” he said. “The ECB has provided reason for that optimism.
“The bounce in oil overnight has also supported the Aussie because it is good for our liquefied natural gas exports.” He said the Aussie dollar has been closely tracking equity movements this year.
The lift in the Australian dollar followed a “text book rise” in riskier currencies including the New Zealand and Canadian dollars.
The three currencies were also supported by a major liquidity injection of more than 400 billion yuan into its financial system on Thursday, the most in three years, Commonwealth Bank of Australia senior currency strategist Joseph Capurso said.
“Two central banks from large economies easing their monetary or financial policies are supportive for currencies linked to global economic conditions,” he said.
“All three currencies are tracking over 1 per cent above their recent lows.”
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.
Major Economic Events for the week:
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Cur. |
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Event |
Actual |
Forecast |
Previous |
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Monday, January 25, 2016 |
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EUR |
German Ifo Business Climate Index |
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108.4 |
108.7 |
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Tuesday, January 26, 2016 |
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Holiday |
Australia – Australia Day |
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USD |
CB Consumer Confidence (Jan) |
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96.5 |
96.5 |
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Wednesday, January 27, 2016 |
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AUD |
CPI (QoQ) (Q4) |
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0.3% |
0.5% |
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USD |
New Home Sales (Dec) |
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500K |
490K |
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USD |
Crude Oil Inventories |
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3.979M |
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Thursday, January 28, 2016 |
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NZD |
Interest Rate Decision |
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2.50% |
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GBP |
GDP (YoY) (Q4) |
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1.9% |
2.1% |
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GBP |
GDP (QoQ) (Q4) |
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0.5% |
0.4% |
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USD |
Core Durable Goods Orders (MoM) |
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-0.2% |
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USD |
Pending Home Sales (MoM) (Dec) |
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0.7% |
-0.9% |
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Friday, January 29, 2016 |
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EUR |
CPI (YoY) (Jan) |
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0.4% |
0.2% |
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USD |
GDP (QoQ) (Q4) |
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0.8% |
2.0% |
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CAD |
GDP (MoM) (Nov) |
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0.2% |
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Upcoming Government Bond Auctions
Date Time Country
Jan 25 11:30 Germany EUR 1.5bn Jan 2017 Bubill
Jan 25 13:00 Norway Details of bond auction on Jan 27
Jan 25 17:20 Italy Details of BTP/CCTeus on 28 Jan
Jan 26 11:10 Italy Holds CTZ/linker bond auction
Jan 26 n/a US Holds 2-year note auction
Jan 27 11:05 Norway Holds bond auction
Jan 27 11:30 Germany EUR 1bn 2.5% Aug 2046 Bund
Jan 27 17:20 Sweden Details of bond auction on 03 Feb
Jan 27 n/a US Holds 2-year FRN auction
Jan 27 n/a US Holds 5-year note auction
Jan 28 11:03 Sweden Holds I/L bond auction
Jan 28 11:10 Italy Holds BTP/CCTeus auction
Jan 28 n/a US Holds 7-year note auction
Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11