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| Action Insight Weekly Report | Markets Snapshot |
Risk Rally Extended on Global Economic Data, Aussie and Kiwi Gained MostRisk markets' pull back was rather shallow last week with help of solid global economic data and indeed, major equity indices finally resumed recent rise after much stronger than expected employment data from US. While DOW is still limited by an intraday high made last year at 12876, the close of 12862 on Friday was the strongest close since May 2008. UK FTSE 100 hit six month high of 5901 before closing near to this level while German DAX also closed at six month high of 6766. Commodity markets were mixed. Gold pared much of the week's gain on Friday while Crude oil regained some ground following stocks. CRB commodity index jumped to close the week on 314 level. In the currency markets, dollar was mixed as it was bounded in range against European majors, strengthened against yen but weakened against commodity currencies. Nonetheless, the trend in European commodity crosses was clear as EUR/AUD and GBP/AUD dived to new lows. After some indecisive price actions, we're now back to the mode of sell European, buy AUD and NZD on risk rallies. |
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| Featured Technical Report | |
AUD/USD Weekly OutlookAUD/USD rose to as high as 1.0793 last week and the break of 1.0752 serves as the first signal that consolidation pattern from 1.1079 is finished at 0.9663 and the larger up trend might be resuming. Initial bias remains on the upside and AUD/USD should now target a test on 1.1079 high next. However, note that it's far from certain that the consolidation from 1.1079 is completed. And indeed, a break below 1.0525 support will flip bias back to the downside and possibly start another falling leg inside the consolidation pattern toward 0.9387 support level. |
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2012 Forecasts: Canadian Dollar To Be Support By QE3 In 2H12Canada will by no means escape from the recent global economic turmoil. As an economy heavily reliant on exports, the sovereign debt crisis in the Eurozone and the stringent fiscal consolidation to be adopted by the US are expected to hurt Canadian economy. Weakening economic outlook will probably trigger the BOC to lower interest rates later in the year. However, on the whole, we continue to believe that higher commodity prices and Fed's QE3 would drive CAD higher later in the year. 2012 Forecast: AUD Boosted By Speculations Over Fed's QE3 In The Near-TermThe dovish January FOMC statement thrilled investors and boosted higher-yield currencies. Australian dollar was one of the beneficiaries. AUD soared against USD after the Fed pushed back the first expected rate hike to late-2014, from mid-2013 as projected in previous statements. Moreover, renewed speculations on QE3 have boosted AUD as well as other cyclical currencies. Australian dollar is expected to rise further in the near-term amid rising likelihood of monetary easing. In the medium- term, AUD will likely trade sub-parity against the USD but upside risks remain there for the commodity currency and any accommodative policy from China should help push the currency higher. | ||
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The Week in Review and Outlook
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