Horses, bears and a time of anticipation

November 5, 2014

I hope Australian traders enjoyed yesterday’s Melbourne Cup and took home some profits not just from the Cup but also from the movements in the Aussie Dollar. The Aussie briefly touched a four-year low around 0.8645 in the morning with the trade deficit in September greater than expected. The good news from retail sales may help the currency stay beyond the level as it was up 1.2%, partially inspired by new iPhon sales. However, after the nothing-new RBA latest statement, the pair managed to rise away from the day low to an area near 0.8750.

The outlook for the AUDUSD is still bearish against the backdrop of a second round of USD rally. Furthermore, the RBA board is under increasing pressure as exports were pared by depreciations of other currencies like the Yen and Euro – some already labelling this situation a ‘currency war’. Probably in the next year, the pressure may push the RBA to lower the exchange level.

AUDUSD 051114 | Vantage FX

The Canadian Dollar, on the other hand, keeps falling against the USD to a 1.14 level – the lowest level since September, 2009. As the oil price slumped again last night, the USD/CAD may rise to a further high sharing company with the AUD and NZD who are close to refresh new lows.

USDCAD 051114 | Vantage FX

The Asian stock markets showed little change except for Japanese market which still seemed to be in carnival mode. The Nikkei Stock Average rocketed up 2.73% to 16862. The Shanghai Composite rose 0.03% to 2431 whilst the ASX 200 gained 0.24% to 5520. In European stock markets, the UK FTSE was down 0.52%, the German DAX edged down 0.92% and the French CAC Index fell 1.52%. The US market closed slightly lower. The S&P 500 lost 0.29% to 2012. The Dow rose 0.1% to 17384, while the Nasdaq Composite Index dropped 0.33% to 4624.

On the data front, the Euro region and UK will release their Service PMI after the opening of the European session. Also, Eurozone Retail Sales will be out at 21:00 AEDST. The US ADP Non-Farm Employment Change will be at midnight and the ISM Non-Manufacturing PMI later will attract many traders’ eyes.

Have a great trading day!

Anthony


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