Compass Global Markets' Blog

Market Update – 20th October 2016 – AUD/EUR Busts Through 0.7000, AUD/USD Grinds Past 0.7700

Posted by Patrick Downes on October 20, 2016 at 9:33 AM

The Aussie dollar has surged past 0.7700 overnight, providing importers yet another opportunity to hedge their upcoming exposures at levels seen only on two or three occasions in the past six months. For importers wishing to purchase EUR and GBP the deal gets even sweeter with both AUD/EUR and AUD/GBP reaching fresh highs overnight at 0.7030 and 0.6280 respectively.

US and European equities along with commodities also performed quite well thanks to improving growth/inflation numbers in China and to a lesser degree in the U.S and U.K. Gold not surprisingly has back tracked.

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Market Update - 19th October 2016 - AUD/USD Higher On Soft US CPI Figure

Posted by Patrick Downes on October 19, 2016 at 9:45 AM

U.S and European equity markets along with AUD/USD pushed higher overnight thanks to a mostly flat U.S CPI figure. The benchmark CPI figure came in around expectations at 0.3% while core CPI (which excludes food and energy) came in around 0.1%. U.S inflation is running at around 1.5%-2% for the year. The CPI figures while not shooting the lights out do leave the door open to a rate hike before year end, but they also give the more bearish members of the Federal Reserve ammunition to oppose any rate hike before 2017 - and perhaps that's why we're seeing AUD/USD rally along with U.S equities.  

Ahead today is Chinese GDP and Industrial Production figures with both looking to come in around the six and half percent mark. Important to add that while there's been a lot of Chinese economy bashing over the past few years including calls that China's headed for a very hard landing, both gauges appear to have bottomed out and perhaps may even be rising again when you look at a more macro chart. Note: don't under estimate the Chinese economy and Chinese officials who have proved that they are willing to bolster and support growth whenever and wherever it's required.

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Market Update - 18th October 2016 - Aussie Edges Higher Overnight, RBA Minutes Due @ 11.30am

Posted by Patrick Downes on October 18, 2016 at 9:49 AM

Monetary policy minutes from the latest RBA meeting will be released at 11.30am this morning, while in the U.S the latest CPI and manufacturing sales figures will be released 11.30pm this evening. It makes for a decidedly more eventful session of trade following a quiet day yesterday in which AUD/USD traded in a tight range between around 0.7580-0.7630 on the wholesale market. AUD/GBP remains the bolter with the currency pair now trading above 0.6250.

U.S and European equities retreated during overnight trade with U.S markets down around 0.3% while in Europe the U.K FTSE gave up gains to the tune of about 1%. It still puts U.K stocks ahead about 3.5% this month and 9% this year. The local ASX200 on the other hand is up a measly 2.3% in 2016. Commodities prices have remained mostly stable with iron ore still hovering just under US$60 a tonne.

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Market Update – 14th October 2016 – All Eyes On US Economic Data Tonight As AUD/USD Again Tests 0.7500

Posted by Patrick Downes on October 14, 2016 at 9:36 AM

U.S economic data comes in thick and fast tonight, with the latest retail sales, producer prices (PPI) and consumer sentiment figures capping off what has been a very quiet week. The trifecta of announcements will be watched closely by the U.S Federal Reserve and market participants alike given all the chatter surrounding further Fed interest rate hikes perhaps as early as next month. The Fed will be hoping to see a snap to a two month string of negative or flat retail sales and producer prices, while they’ll also be hoping to see continued growth in consumer sentiment. Should we see all three improve you’d have to expect AUD/USD to again test 0.7500 or lower – a level at which it has been unable to break below since a brief soire in the 0.74’s during the middle part of last month.

Other than that, it looks like Aussie equity markets are set to snap a two day losing streak with ASX 200 Futures pointing towards a 0.2% gain on the open.

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Market Update - 12th October 2016 - Markets Dip As Optimism Takes A Breather

Posted by Patrick Downes on October 12, 2016 at 8:30 AM

AUD/USD is back at the low end of its recent range with the currency pair succumbing to a bit of global pessimism which sees both equities down and the safe havens of JPY and USD up. The Aussie is trading just above 0.7500 this morning ahead of U.S FOMC Minutes which are released tomorrow morning at 5.00am. The minutes from the latest U.S Fed meeting should create a bit of volatility in the early hours of tomorrow morning for those up and about.

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11th October 2016 - Weekly Currency Market Report.

Posted by Thomas Su on October 11, 2016 at 11:33 AM


The Market in Brief:

                                  • AUD down V USD, EUR and CHF and up V GBP, JPY, NZD and CAD.
                                  • AUD RBA leaves rates on hold at 1.5% as expected and AUD data prints above expectations
                                  • AUD hits fresh 40 month high against GBP.
                                  • USD Non Farm Payrolls 156k V expected 171k. Unemployment up from 4.9% to 5.0%. 

Market Events Due:

                                • EUR German ZEW Economic Sentiment (Tue)
                                • USD FOMC minutes (Thur) Retail Sales and PPI (Fri) Prelim UoM Consumer Sentiment and Fed Chair Yellen speaks (Sat)
                                • CNY Trade balance (Thur)
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Market Update - 11th October 2016 - Markets & Aussie Subdued Amid Data & News Vaccum

Posted by Patrick Downes on October 11, 2016 at 8:20 AM

A lack of data overnight and a gripping second debate between Drumpf and Clinton leaves markets little changed from yesterday. AUD/USD is still teetering around the 0.7600 figure, while the GBP has continued its slow and steady decline against most currencies. AUD/GBP is now near its highest levels since the tail end of the European debt crisis back in mid 2013.

Again we have no crucial data releases today, but Aussie stocks look set to open higher thanks to a boost in commodity prices overnight and strong session on both European and U.S equity markets.
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Market Update - 10th October 2016 - Have Poor U.S Jobs Figures Killed Off A Rate Hike In December

Posted by Patrick Downes on October 10, 2016 at 9:09 AM

The latest U.S jobs figures released Friday night came in well below estimates and according to some, may have been poor enough to kill off a rate hike in 2016. However there is another camp who still believe the U.S Federal Reserve will resume their rate tightening cycle with a rate hike in December. In any case it’s a line ball type of scenario and with AUD/USD holding just under 0.7600 you’d have to suggest the market isn’t really pricing in a rate hike from the Fed. Only time will tell and unfortunately I don’t have a crystal ball!

We have a pretty quiet week ahead in terms of economic data with only Chinese trade balance figures due Thursday while U.S retail sales and PPI are due Friday night. Again this week the focus will be on the U.S data and in particular these retail sales figures – the Fed will be looking for a strong uptick in retail sales which has really faltered over the past 2 months.

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Market Update - 5th October 2016 - RBA Leave Rates Unchanged Ahead of Retail Sales Figures

Posted by Patrick Downes on October 5, 2016 at 8:36 AM

The latest cash rate decision released yesterday was somewhat of a non-event with the RBA led by new Governor Philip Lowe deciding to leave rates unchanged again at 1.5% p.a. Philip Lowe and his team noted that while current inflation and economic growth remains somewhat subdued it is moving in the right direction and current rates remain "appropriate".

It's looking extremely unlikely we'll see any further rate cuts from the RBA this year so attention really turns to the U.S Federal Reserve who have continued to suggest that their rate normalisation strategy is not yet over. What this means is a rate hike is now being factored in perhaps this month or next (despite U.S elections). Should this occur, I think we'll see a sharp drop in AUD/USD as the USD bulls jump back on the bandwagon and hence buying USD right now via Forward Cover or even an Option is your best strategy to take advantage of current rates and hedge upcoming exposures.

Stocks and commodities were mixed overnight with U.S equities retreating by about half a percent, while European stocks moved forward by around 1%. Oil continues to push higher, while iron ore prices were flat and gold retreated.

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4th October 2016: RBA Announcement Cash Rate unchanged at 1.50 per cent

Posted by Thomas Su on October 4, 2016 at 2:30 PM

Statement by Philip Lowe, Governor: Monetary Policy Decision

 At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year, but growth in global industrial production and trade remains subdued. Actions by Chinese policymakers have been supporting growth, but the underlying pace of growth in China has been moderating. Inflation remains below most central banks' targets.

Commodity prices have risen over recent months, following the very substantial declines over the past few years. The higher commodity prices have supported a rise in Australia's terms of trade, although they remain much lower than they have been in recent years.

Financial markets have continued to function effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Government bond yields are near their historical lows.

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