Compass Global Markets' Blog

28th March 2017 - Weekly Currency Market Report

Posted by Thomas Su on March 28, 2017 at 12:11 PM

 

The Market in Brief:

                                                              • AUD down against the majors.
                                                              • GBP CPI y/y 2.3% V expected 2.1%.
                                                              • NZD RBNZ leaves cash rate at 1.75% as expected
                                                              • USD Weekly Unemployment Claims 261k V expected 241k and Core Durable Goods 0.4% V expected 0.5%.

Market Events Due:

                                                          • EUR  German Ifo Business Climate 
                                                          • USD CB Consumer Confidence (Wed) Final GDP q/q and Weekly Unemployment Claims (Thur)
                                                          • GBP Current Account (Fri)
                                                          • CAD BOC Gov Polz speaks (Wed) GDP m/m (Fri)
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Market Update - 28th March 2017 - Aussie's Slide Continues In Absence of Economic Data

Posted by Patrick Downes on March 28, 2017 at 10:05 AM

The Aussie dollars gradual decline continued again overnight with the Aussie lower by around half a percent across the board. The big mover of late has been AUD/GBP with the U.K local currency surging on higher inflation numbers and speculation we could see a move from the Bank of England to stem this booming inflation via higher interest rates. Equities and commodities posted mixed results with Gold the clear winner while more risky assets like iron ore and equities lost ground. 

No data is released today but we will see the latest Consumer Confidence figures out of the U.S tonight. Consumer confidence has been on the rise ever since the GFC and paints a pretty rosy picture of U.S consumers however we are now reaching levels of confidence that we saw just preceding the GFC - what this means for markets is anyones guess, but certainly worth treading with caution particularly if long U.S equities. 

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Topics: Report, Market

Market Update - 27th March 2017 - Aussie & Equities Lower As Trump Euphoria Wanes

Posted by Patrick Downes on March 27, 2017 at 9:57 AM

Markets dipped somewhat in the later part of last week dragging the Aussie, equities and commodities lower as markets become ever more cautious/doubtful about the ability of The Donald to enact any of the promises from his campaign. His latest failure to repeal and replace Obamacare have only added to the doubts that any infrastructure spend and tax cuts will ever come to fruition.

The Aussie is markedly lower across the board and with little to no local data out this week it could mean lower levels are here to stay at least into the foreseeable future.

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Topics: Report, Market

Market Update - 22nd March 2017 - Risk Assets Take A Beating As Markets Wait On Trump Infrastructure Plan

Posted by Patrick Downes on March 22, 2017 at 8:32 AM

The Great British Pound was the best performing major currency overnight with the U.K's local currency boosted to the tune of 1-1.5% thanks to a CPI figure which beat estimates by around 0.2%. The latest figure also clocked the fastest pace of CPI growth since October 2013. The booming CPI figures we're seeing out of the U.K are likely a direct result of the 0.25% rate cut and 60B GBP increase in QE we saw last year from the Bank of England immediately following the Brexit win.

The Aussie dollar fell a whopping 1.5% vs. the Pound to be trading back below 0.62, while we're also lower against all of our other major trading partners, including the U.S, Europe and Japan.

No data is released tonight, however a poor showing for U.S equities, commodities and our local currency overnight suggest the ASX could be down by as much as 1% on the open.

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Topics: Report, Market

Market Update - 21st March 2017 - Monetary Policy Minutes Due At 11.30am, UK CPI On Track For Best Reading In 3 Years

Posted by Patrick Downes on March 21, 2017 at 10:00 AM

An absence of economic data over the past 24 hours hasn't stalled the Aussie Dollars relentless push higher with the local currency up around half a percent across the board. AUD/GBP is back above 0.6200 while AUD/EUR and AUD/USD look destined to consolidate in the 0.72's and 77's respectively should this mornings monetary policy minutes prove bullish or overly optimistic.

The monetary policy minutes to be released at 11.30am are from the latest cash rate decision in which the RBA chose to leave rates on hold at 1.5%. Given this we'll be looking for indications on where the RBA see the economy headed as well as any views they might have on the U.S economy and the local housing market which is certainly becoming a hot issue given affordability questions.

Other than that we have U.K CPI a little later this evening with markets expecting CPI growth of around 2.1%. Since late 2015 UK CPI has been on a steep upward curve and the latest reading if it comes to fruition would be the best reading since late December 2013. AUD/GBP is certainly at risk to a downside movement should this strong data transpire but given economic headwinds as a result of Brexit any losses will likely be constrained.

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Topics: Report, Market

Market Update - 20th March 2017 - Aussie Lower On Profit Taking, Japan Celebrates 'Vernal Equinox Day'

Posted by Patrick Downes on March 20, 2017 at 9:01 AM

Equities markets finished the week mixed with our local market and European markets up around one quarter of one percent while U.S markets finished flat or marginally lower. The Aussie dollar is however generally lower this morning in what could be seen as a bit of profit taking after a strong move from the mid 75's back to 77's late last week.

We start the week with no economic data releases but it is a holiday in Japan today, so no Yen payments will go out. The Japanese today celebrate Shunbun no Hi, or 'Vernal Equinox Day' and marks the day that the sun crosses the equator making both night and day equal in length. According to Web-Japan.org "it's a day to commune with nature and to show our affection for all living things." Just one of the reasons why I love Japan and why we would should if possible try to be more like Japan.

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Topics: Report, Market

Market Update - 16th March 2017 - U.S Fed Raise Rates 25 Basis Points With More To Come, AUD Rallies?

Posted by Patrick Downes on March 16, 2017 at 8:39 AM

Early this morning the U.S Federal Reserve led by Janet Yellen decided to lift rates by 25 basis points while also providing a reasonably hawkish (positive) rhetoric about the future of the U.S economy, inflation and therefore interest rates. But while this was expected the resulting move on markets was not; in fact markets did the complete opposite of what the text books will tell you should have happened. Basic economic theory suggests when interest rates go up and are expected to continue to move higher then typically the local currency, in this case the USD should rise while equities should fall as the higher funding rate makes doing business more expensive. However, we saw (as suggested above) the opposite happen overnight, with the US Dollar index falling quite dramatically, while U.S stocks surged ahead by as much as 1.6%.

Also strange was AUD rallied across the board while the Gold price rallied by nearly 2% which is typically a sign of increased risk aversion....Overall a very confusing night for markets and perhaps looking a little bit like the movie Split with lots of different personalities going on.

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Topics: Report, Market

Market Update - 15th March 2017 - Markets Gear Up For Potential Rate Hike From The Fed Tonight

Posted by Patrick Downes on March 15, 2017 at 8:33 AM

Chinese industrial production numbers moved marginally higher in the latest reading and since early 2015 have maintained a solid pace of growth between around 5.5%-6.5%. While this is certainly lower growth figures to what we saw over the previous 10 years, it also suggests the Chinese economy is not as some 'experts' predict doomed. In fact China's resilience to continue to grow their economy and move toward a more consumer led economy appears well and truly on track, perhaps another reason why commodity prices have rebounded over the past 12 months.

Tonight sees the release of US CPI and retail sales figures ahead of the U.S Federal Reserve's latest interest rate decision tomorrow morning. And while it would appear that the market has priced in a 25 basis point rise in U.S interest rates to 1% we'll still have to wait and see how the market reacts if the Fed do raise again. From a purely economic view, the USD should rise if rates rise, and so the inverse is expected for AUD/USD. At the moment, AUD/USD is holding in the 0.75's but you'd have to think that 0.74's are more likely tomorrow should rates go up.

**Clients wishing to mitigate the risk of purchasing at a lower rate, may want to consider processing payments today ahead of tonight's announcements**

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Topics: Report, Market

14th March 2017 - Weekly Currency Market Report

Posted by Thomas Su on March 14, 2017 at 12:54 PM

 

The Market in Brief:

                                                            • AUD continues exactly the same trend as last week V the majors namely down V USD, EUR, CHF up V GBP, JPY, NZD
                                                            • RBA leaves rates on hold at 1.5% as expected.
                                                            • CNY Trade Balance -60bn V expected +173 bn CPI y/y 0.8% V expected 1.9%
                                                            • ECB leaves rates at 0% as expected
                                                            • USD Non Farm Payrolls +235k V expected +196k with Unemployment Rate steady at 4.7%

Market Events Due:

                                                        • CNY Industrial Production y/y (Tue)
                                                        • USD PPI (Tue) CPI m/m & Retail Sales m/m (Wed) Federal Funds Rate and FOMC Statement Building Permits Philly Fed Manufacturing Index (Thur) Prelim UoM Consumer Sent (Sat)
                                                        • GBP Average Earnings Index 3m/y &  Claimant Count Change (Wed) MPC Official Banks Rate Votes & Monetary Policy Summary & Official Bank Rate(Thur)
                                                        • AUD Employment Change & Unemployment Rate (Thur)
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CGM Weekly FX Update - 14th March 2017

Posted by Thomas Su on March 14, 2017 at 12:50 PM

 

 

 

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