Euro Dollar Volatility, Federal

Budget Update & Key

Commodity Movements

with Peter Esho May 11, 2014

The big news in currency markets this week is the fall in the Euro from

some very elevated levels. We’ve basically been calling a top in the Euro

for the past few weeks that actually surprised us to the upside before it

actually started to spiral down, but it is eventually starting to correct. The

expectations in the market are, the ECB will, at some point in time, come

into the market and look to cap that elevation in the Euro against the US

dollar.

In this week’s Invast Insights client-only report, we actually go through the

DAX, which is a very key market amongst our clients. We work through

the key DAX index constituents. We show and illustrate just what impact

the high Euro has had on corporate profits for businesses like Bayer, for

example, right at the very top in terms of the largest index constituent on

the DAX.

With all that corporate news and financial impact in mind that�’s really

what’s flowing through into the ECB and pressuring the ECB to start to act

on that exchange rate. There�’s no doubt that will be the key focus for

traders in currency markets this week.

It’ll also be very important to watch the Chinese numbers, the industrial

production and retail numbers which come out this week. They will be a

major direction driver for the AUS dollar and also for commodity prices, but

we are seeing also a base being developed in the copper price which now

looks quite comfortable, with major support at 3 dollars a pound. We’re

seeing metals like nickel, for example, continuing to rally high. We’’re

seeing a flat to stable Brent Crude price, which again we�’ve spoken about

in Invast Insights this week for the technical outlook. The copper price will

be a major key market that traders will be watching over on the Chinese

data which comes out.

The Australian budget is a very topical point. It’’s a point which we’ll update

our clients on the Invast blog. We�’ll go through all the major points, but it’s

something that’s very unlikely to move the market, both the stock market

on the ASX200 index and also the AUS dollar.

We think the key focus tomorrow, on Tuesday, will be the Chinese

numbers, not necessarily the Australian budget. Make sure you tune in to

our live market analysis this week on Wednesday.

Live market analysis last week was on gold. We called the key support

levels. We think gold is looking quite comfortable at around the 1280 an

ounce level. We’’ll be updating gold and other major markets including the

DAX on Wednesday in our live market analysis.

Towards the second half of the week there’s a fair bit of news coming out

from the bank of England. There�’s also key data around inflation coming

out of Europe and there�’s also similar data coming out of the United

States. We�’ll be updating that all. With all that in mind, the Euro, the

Chinese data and the copper market are the things that we’’re keeping an

eye on very, very closely at the beginning of the week.

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