Morning Report: 08.30 London
- This morning the Australian dollar is dropping sharply, with a general ‘risk off’ feel to the morning session. The Aussie is being hit by the release of the RBA rate statement which warned of lower inflation and by implication, further rate cuts. The other main catalyst this morning is the uncertainty surrounding the Greek debt deal. While Greek authorities were quick to trumpet the deal as being done, European authorities still appear unimpressed. Officials still appear confident that a deal will be done, but markets are evidently not so sure.
- The AUD/ USD and AUD/ JPY are leading the fallers, down 0.89% and 0.95% respectively. The NZD/ USD is not far behind, down 0.60%.
- By contrast the euro itself is down only slightly on the day.
- Gold is under pressure, dropping 0.52% as the pressure metal failed its latest attempt to push through the $ 1750 level.
Coming up today:
- Coming up today we have UK PPI input at 09.30 with a small gain expected.
- US and Canadian trade balance figures follow at 13.30.
- The Prelim University of Michigan Consumer sentiment survey follows at 14.55.
- Fed chairman Bernanke speaks at 17.30.
Bet Idea:
- It is hard to know whether the latest Greek impasse will pass quickly or not. Greece doesn’t have many hands to play other than the nuclear option of leaving the euro. While this might ultimately be the best solution, it seems the Greek deal is more likely to pass than not. While this latest problem may not be directly behind the morning’s Aussie dollar decline, the AUD/ USD likely to feel the indirect benefits of any improved trading sentiment.
- The AUD/ USD is unlikely to stay where it is for the rest of the day, but the balance of power might be slightly skewed to more upside.
- A good way to play this might be a HIGHER trade predicting that the AUD/ USD closes above 1.0750 in 3 days time (Monday) for a potential return of 200%.
- You can find direct links to this trade idea here and here.
Summary:
