Reuters Insider - Inside the News: Aussie Loses Favour as Commodities Currency

CPI SA

13/06/2016 11:08

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        The Australian dollar is losing its appeal as the 
                     commodities currency of choice, says IFR's John   
                     Noonan.                                           
 
 
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                 Inside the News, 10AM Hong Kong, Wednesday, January 12. The Australian flooding 
continues to take its toll on the country, with a Central Bank board member 
warning the damage may slash up to 1% off of GDP growth. Most economists had 
expected an impact of 0.5% or less. Evacuations are now underway for some 
residents of Brisbane, the country's third largest city. Fourteen people are 
confirmed dead with at least 90 more missing. That put the Aussie-Dollar under 
pressure, dropping towards the 0.9800 mark in the Asian session. 

IFR's Head of Asia FX John Noonan says forex traders no longer see the Aussie as
the commodity currency of choice. The flood crisis in Queensland has led 
investors to sell out of the Australian Dollar and now they're moving into the 
Canadian Dollar as the commodity currency of choice. The Australian Dollar has 
now fallen 5% against the Canadian Dollar since the start of 2011. The Aussie-US
fell to 0.9803 today to break below the 0.9811 support level which is the 61.8% 
Fibonacci of the 0.9536, 1.0257 move. And the next level of support isn't found 
until the 100-day moving average at 0.9745. Some analysts are looking for a move
all the way to a full retracement of the December 1 low at 0.9536. 

Euro-Dollar ticking higher in Asian trade as the European Union's Economic Chief
calls for the lending capacity of the bloc's rescue fund to be reinforced and 
widened. The next major technical target will be resistance at 1.3055. Euro 
traders will track the Portugal debt auction today as it goes to market with 
EUR1.25 billion of notes, in a key test of investor appetite for EU peripheral 
debt. China's rising CPI remains a major concern for markets but Beijing has the
ability to manage inflation expectations. That's the message from Vice Premier 
Li Keqiang who spoke at a China-Britain business council dinner in London 
overnight. 

Here's BNP Paribas' Andrew Freris. Food prices in Asian indexes account for as 
much as 30%. At some cases, even well in excess of 30%. So the central banks, of
course can do nothing about food prices and increases in interest rates. It's 
not going to affect the price of onions or the price of chilis but most 
definitely, it affects expectations. So as food prices go up, the central banks 
will have to be a little bit ahead of the bankers and interest rates. But the 
PBOC suggests the fight against inflation will be fought not with monetary 
policy but by boosting domestic demand and rebalancing the economy. Central Bank
Deputy Governor Yi Gang made the remark to a state-affiliated magazine. The 
country's also on track with its push to internationalize the Yuan. 

Bank of China's New York and LA offices have begun offering RMB deposit and 
exchange services to clients following similar offerings from the likes of HSBC.
In commodities, Nymex Light Sweet Crude shooting up past $91 a barrel as the 
shutdown of two North Sea oilfields dote supply concerns. The Trans Alaskan 
pipeline remains shut but officials there plan to temporarily restart the pipe 
to avoid freezing. We'll bring you more in food inflation later today in a 
special looking at global price increases with the Asian Development Bank, 
Rabobank and Control Risks right here on Insider at 0930 GMT. I'm Cathy Yang, 
this is Reuters