Fundamental Analysis Brief: The Aussie hits 2010 June lows

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The Aussie hits 2010 June lows
The Aussie hits 2010 June lows

The Australian Dollar is getting to the 2010 lows after the commodities’ downward path turns out to be a long-term one. Thus, we can name the iron ore, which gets an estimated price of 60 dollar per metric ton, as the trade nation Australia risks a dangerous budget deficit. As this morning in Australia the Mid-Year Economic and Fiscal Outlook was published, we can resume the main points:

  • The 2014-2015 deficit seen at 40.4 billion dollar versus 29.8 billion dollar in the May estimates
  • The Australian government assumes 60 dollar per ton iron ore price over 2 years
  • The 2015-2016 deficit seen at 31.2 billion dollar versus estimates at 17.1 billion dollar in May
  • Projects budget surplus in 2019-2020
  • Forecasts 6.75% China growth in 2015

 

Likewise, the S&P ratings declared that the Australian AAA’s rating and outlook is not in danger for now as the budget deficit was broadly forecasted. The news put downward pressure on the Australian dollar which fell to the support line at 0.8203, increasing the chances of continuing the descending trend. Tomorrow we may follow the speech of the governor’s assistant Debelle and also the Monetary Policy Meeting Minutes which may bring announcements about future measures that could be assumed.

 

Another top mover on the market was the Japanese yen which is posed to continue its downward trend after Shinzo Abe won elections this week-end. This is the favorable scenario for the continuation of the deflationary measures which since now caused the massive depreciation of the Japanese yen. We had also the publishing of the Tankan Manufacturing Index down to 12 points and the Tankan Non-Manufacturing Index up to 16 points. Tomorrow’s Japanese Flash Manufacturing PMI will be followed carefully which is expected slightly increase while in the morning of the 17th of December we can assist to the publishing of the trade balance, expected to widen.

 

The EURUSD currency pair managed to stay over the 1.2400 threshold but is questionable if it will maintain in this area by tomorrow. Traders need to be extremely attentive to economic data which are set to be released today and tomorrow. Thus, today we expect the German Buba Monthly Report for the Euro while for the US Dollar an entire set of industrial sector data is to be published. On Tuesday, the main trigger of the market will be the publishing of the PMI indexes for the Euro area.

 

Over the next period would be good to watch the evolution of the oil market as it posted new lows. As for the WTI oil, it was quoted to 56.72 dollars per barrel and the Brent oil touched the 61.19 low after the United Arab Emirates declared that it would not consider a cut in the production even if the barrel will worth 40 dollar. The current trend of the oil market is descending and for now it seems to continue this way.

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