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Tuesday 23rd September 2008 RANGES:
AUD/USD: 0.7800 - 0.8361
NZD/USD: 0.6489 - 0.6900
AUD/NZD: 1.1830 - 1.2349 Last Week: As we cited last week, the markets were dominated this past week by developments in the U.S. financial markets.The failure of Lehman Brothers, and the government sponsored rescue of AIG provided unprecedented events and movements in the financial markets.There has been weak data out of the U.S. this week, which has not helped the USD, but we have also had bad current account data out of N.Z. Therefore, whilst the NZD has strengthened against the USD considerably, it has weakened on a trade weighted basis.The AUD has likewise strengthened against the USD, but weakened against the JPY and the EUR this week.AUD/NZD has traded higher, in accordance with our view that the RBA does not need to cut rates as aggressively as the RBNZ. What we did: We were fortunate enough to call the move in the U.S. financial markets and the subsequent play out in the currency markets.Through buying and selling options volatility we have managed, to some extent, to avoid the day to day gyrations in the FX spot market, but have taken advantage of news related movements when we could,To that end – we have at this stage, managed to have a good month. This Week: The markets will again be influenced by developments in the U.S. financial markets. At the time of writing, the markets assessing the viability of the bailout package that has been put into place by the U.S. administration and the Federal Reserve Bank of the U.S. It would be unrealistic at this point to try and analyse the economic data releases this week, as they are really not relevant in the short term. The USD is currently under pressure as the market has decided that the huge liquidity injection into the marketplace by the US government will inflate the US current deficit, and possibly put at risk the tolerance of Asian sovereign funds to hold US debt, and by default the USD. What we will do: We will endeavour to protect the profits that we have managed this past week, through prudent hedging strategies around the live positions that we have.
Our feeling is that the USD will possibly become oversold this week, and we are managing our downside risk in that respect. THE WEEK AHEAD: Monday 22nd AUS NEW MOTOR VEHICLE SALES, AUG Tuesday 23rd USOFHEO HOUSE PRICE INDEX
NZCONSUMER CONFIDENCE, SEP QTR Wednesday 24th AUSSKILLED VACACNCIES
USEXISTING HOME SALES, Thursday 25th AUSRBA FINANCIAL STABILITY REVIEW,
USDURABLE GOODS ORDERSNEW HOME SALES Friday 26th USGDP PERSONAL CONSUMPTION CORE PCE
NZGDP, JUN QTR |
