Compass Global Markets' Blog

Market Update - 17th November 2017 - A Drop In Unemployment Rate And Higher Commodity Prices Boost AUD

Posted by Patrick Downes on November 17, 2017 at 9:40 AM

A mixed result for local employment data and a rebound in commodities & equities has halted the Aussie dollars decline for now. AUD/USD which had looked like it was potentially going to test the low 0.75's or even 0.74 was supported by a surprise drop in the unemployment rate to 5.4%. However the key thing here is that while more and more people are finding jobs in both Australia and the U.S wages have been more or less stagnant for a decade and asset prices (predominantly housing here and stocks in the U.S) have skyrocketed as a result of low interest rates. With respect to Australia one of either two things must happen, wages increase to reflect the increase in housing prices or house prices decline to a more sustainable level to allow those with a modest salary the ability to purchase property and a roof over their head.

Ahead tonight is a speech from Mario Draghi and the market will be looking for signs on when the first of perhaps many rate hikes will occur. The European economy has been picking up steam so it's probably more a 'when' do rates rise rather than 'if'. AUD/EUR has been reflecting this expectation and has been in a free fall since about Feb and there is probably more to come, those with EURO exposures can certainly book Forwards to hedge any further downside risks.

AUD EXCHANGE RATES:

AUD/USD – 0.7588

AUD/GBP – 0.5750

AUD/EUR – 0.6447

AUD/NZD – 1.1079

AUD/JPY – 85.784

COMMODITIES: 

Gold – A$1684/oz

Silver –  A$22.51/oz

WTI – US$55.35/barrel

DATA RELEASES TODAY:

EUR - ECB President Draghi Speaks at 7.30pm

USD - Building Permits 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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