THE TIPSTER
BOTH the cricket team and the national currency are enjoying a good start to 2012, as the Aussie rallies on good economic data from China and the US that has emboldened the optimists in financial markets. A twelve-week high for this raciest of risky currencies however means that it is starting to look vulnerable to profit-taking and some bad news from Europe. A few badly placed words from the Brussels comedy club could easily send Aussie dollar-dollar downward once again, particularly since each push above parity during 2011 resulted in a lurch downward shortly thereafter. IG Index quotes $1.0476-$1.0478 for Aussie dollar-dollar
Euro-dollar spent most of Tuesday morning battling to hang on to the gains that has seen it retake the key $1.300 level. It almost reached the resistance level from December/early January around $1.3070, but the failure to take out those highs though should worry the bulls. Spread Co quotes a spread on euro-dollar of $1.30053–$1.30061
The Aussie dollar-Japanese yen is one of the best currency pairs to gauge investor risk appetite. With the Japanese central bank rate below 0.10 per cent, and Australia’s at 4.25 per cent, there is a clear incentive to borrow and sell yen to buy Aussie dollars. But this only works when traders are confident enough to take on risk. This dynamic has been in place for over two weeks now, but the pair is hitting resistance around ¥81.00 and a failure to break above here could see it fall back sharply. Investors will head back to the relative safety of the yen at the first sign of danger. GFT quotes Aussie dollar-Japanese yen at ¥80.96- ¥80.99
Today’s release of UK fourth quarter GDP numbers and Bank of England minutes could well give some key clues as to the direction of policy in the coming weeks and the direction of sterling-dollar, especially if the GDP numbers disappoint. The CMC Markets spread on sterling-dollar is $1.55542-$1.55551
Sterling continues to battle it out against the single currency with sterling-euro oscillating around the €1.2000 level. Having broken back above here first thing this year, the UK’s pound has struggled to push on higher and resistance looks to be playing into the bears’ hands. Capital Spreads quotes €1.2010-€1.2013 for sterling-euro.
The stronger dollar saw dollar-Japanese yen pair move sharply through the 55 day moving average and the trend line resistance from the 2007 highs of ¥124.15. As a result the ¥77.55 level should now act as support with further support below at ¥76.50.
Any moves towards the ¥78.00 will most likely meet with strong resistance. Trade balance numbers from Japan will likely add weight to the recent yen weakness. CMC quotes dollar yen at ¥77.748- ¥77.755.