Compass Global Markets' Blog

Market Update - 12th July 2017 - Iron Ore Prices Keeping Aussie Afloat, But Cracks In Housing Market Appearing

Posted by Patrick Downes on July 12, 2017 at 9:54 AM

AUD is up for a second day straight, thanks to another impressive rally in iron ore prices and a marginal jump in business confidence yesterday morning. Iron ore is now back above US$65 a tonne but remains about US$30 bucks a tonne lower than where we were in late Feb. However, the picture isn’t all rosy. Data releases yesterday included the latest home loans figures which came in far lower than anticipated and in conjunction with recent building approvals figures paint a bleak picture for the Aussie real estate market. Home loans figures have been in a steady decline since June 2016 while building approvals have been on a tear to the downside since around April of last year. The figures in conjunction certainly suggest the bubble which has been raging since the GFC, may be be getting closer to a correction. However, nothing is certain and the RBA and Federal Government certainly appear to be committed to keeping the party going. Watch this space.

Local consumer sentiment figures are due out this morning and the question is will we see a fourth month of erosion in consumer sentiment – if we do it may suggest consumers are struggling with current debt commitments and hence unable to allocate funds to other purchases or luxury goods, dinners and so forth. With all this in mind and with the Aussie dollar back above 0.7600 it may be worthwhile looking at some hedging alternatives especially given most of the big four have forecasts for the Aussie dollar in the lows 0.7000’s by the end of the year. Call me to discuss, happy to chat about hedging alternatives.

AUD EXCHANGE RATES:

AUD/USD – 0.7636

AUD/GBP – 0.5941

AUD/EUR – 0.6657

AUD/NZD – 1.0568

AUD/JPY – 86.973

DATA RELEASES TODAY:

AUD – Consumer Sentiment at 10.30am

GBP – Average Earnings Index at 6.30pm

USD – Fed Chair Yellen Testifies at midnight

USD – Crude Oil Inventories at 12.30am

***Above rates are indicative wholesale rates and intended as a guide only***

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick - 0431 278 632 

  Email Patrick: patrick@compassmarkets.com

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Topics: Market, Report

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