THE TIPSTER
THERE has been a slew of good news for sterling: the UK’s second quarter GDP growth rate posted a nine-year-high and retail sales figures have bounded higher too. The pound could finally be back in reach of the big $1.6000 level, which hasn’t been seen sensibly since January. The current IG Index price on cable is $1.5885-$1.5887.
The greenback lost significant ground against the Swiss franc in the early part of last week but the pair now seems to have reached a plateau. Central bank intervention has been ongoing for some months but there’s speculation that there could be a move through the all-time lows of SFr0.9648. There is a risk that this could destabilise the Swiss economy. However, for as long as investors are looking to switch out of euros, the Swiss Franc will hold significant draw. The current IG Index price on dollar-Swiss franc is SFr0.9851-SFr0.9853.
Following Japanese intervention, the dollar reached a high of ¥86.19 against the yen. Since then it has been weakening and rumours of further quantitative easing have been circulating. If the yen were to slide below ¥84 this could increase the likelihood of further intervention and see the dollar strengthen again. Cantor Index offers dollar-yen daily at ¥84.12-¥84.14.
Australian dollar-US dollar has appreciated some 800 basis points since the beginning of the month as the US dollar has been hammered and commodity currencies are in demand. Australian dollar-US dollar has taken out the previous resistance around US$0.9360 all the way to a new 26-month high of US$0.9682. As tempting as it may look to sell short it could be a dangerous play given the momentum behind the pair. It might be worth waiting to see if it reaches the US$0.98 level – the highs of July 2008 – before looking to sell this pair. Spread Co offers a spread on Australian dollar-US dollar of US$0.9676–US$0.9678.