AN UPWARD revision to the UK’s fourth quarter GDP figure helped to boost sterling yesterday. The upward revision was due to stronger output in the construction and manufacturing sectors. Sterling received another boost from credit rating agency Standard and Poor’s which maintained its triple ‘A’ rating on the UK, which bodes well for sterling in the short-term. ETX Capital are currently quoting $1.5090-$1.5093 for its rolling daily spread in sterling-dollar.
Euro-yen is testing its near-term resistance level around the¥125.00 level, after a mini rally in the euro. A concerted push from here could open up more room for further euro appreciation. Capital Spreads’ price is ¥124.75-¥124.78.
Hawkish comments from the Reserve Bank of Australia reversed Australian dollar weakness against the US dollar this week, and Aussie strength shows no signs of abating. The next important level for the Aussie to breach is US$0.9250. With iron ore prices rocketing – Asian steel mills have accepted a 90 per cent price hike – there’s going to be even more reason to buy the Aussie dollar. The current IG Index price is US$0.9202– US$0.9204 for Aussie-US dollar.
The US dollar has appreciated against the yen this week shooting up to ¥93 amid reports that hedge funds have been big dollar buyers. There are also reports that Japanese life insurers and other domestic institutional investors are lining up to add to their holdings of US treasuries and other dollar-denominated assets when the new fiscal year starts on 1 April. The technical backdrop is also supportive of more dollar strength against the ¥93.60 over the coming weeks. Spread Co offers ¥92.47-¥92.49 for US dollar-yen.
Go long the South African rand against the US dollar close to R7.300. The rand is benefiting from commodity strength. But be willing to reverse this position if it breaks its two-year support level at R7.5454. Worldspreads offers R7.4430-R7.4470.