Jan 20th, 2016: Aussie On The Slide Again

• This morning, markets have reset back in the direction of the late 2015/ early 2016 bias of a strong dollar and weak commodities. The dollar index is holding steady at the highs, while the yen has rapidly reversed this week’s bias, sending the USD/ JPY back to the lows.

• The commodity currencies appeared insulated from the less than stellar Chinese growth figures, but not so this morning. The Australian dollar is reversing heavily, while the NZD/ USD has continued its bearish run.

• On a similar theme, the Canadian dollar is breaking new multi-decade highs.

• Meanwhile, the euro and British pound continue to diverge. The former is showing resilience,  while the pound appears to be catching the same cold as commodity producers.

Coming up today: 

• Coming up today at 09.30, we have UK average earnings index, claimant count change and the latest unemployment rate.
• From 13.30, we switch to North America for Canadian Manufacturing sales, released alongside a slew of US data including building permits, CPI and housing starts.
• This is followed by the Canadian BOC rate statement at 15.00 and press conference at 16.15.
• US crude inventories are released at 15.30.

Trade Idea: 

• The New Zealand dollar is has been a consistent loser over recent months and has been a fools errand to fight the trend so far.

• A good way to play this is a LOWER trade predicting that the NZD/ USD closes below 0.6300 in 21 days time for a potential return of 159%.

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