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Patrick Downes

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Market Update - 21st November 2018 - Markets & Commodities Slide For a Second Day, AUD Continues To Be Dragged Down

Posted by Patrick Downes on November 21, 2018 at 8:46 AM

Further declines across U.S and European equities overnight headline a rout across almost all markets as risk aversion once again takes a front seat. Traders sold down the AUD and commodities along with Bitcoin which slid a whopping 10% overnight following falls of about 15% the day before. U.S tech stocks seem to have been the catalyst for this most recent correction, while Trump's outgoing trade war with China has weighed on global growth projections and asset prices all year.

AUD/USD which had started to look reasonably bullish on the charts last week is now looking less so, following the past couple of nights of selling. However, if there is one thing we do know about market sentiment it's that it is a swing and tends to move back and forth with news flow. So it's entirely conceivable at some point this week markets swing back the other one as they go 'hang on, why are we selling when the fundamentals of growth are still in place, China, India and SE Asia are driving global growth and commodities are just starting to come out of a 5 year bear market'.

No economic data out today, but we do have U.S Core Durable Goods orders just after midnight.

AUD EXCHANGE RATES:

AUD/USD – 0.7188

AUD/GBP – 0.5613

AUD/EUR – 0.6317

AUD/NZD – 1.0596

AUD/JPY – 81.091

USD/BTC – $4,329

OTHER MARKETS:

All Ords (XAO) – 5,759

Gold – A$1,692/oz

Silver –  A$19.83/oz

WTI – US$53.24/barrel

DATA RELEASES TODAY:

USD - Core Durable Goods Orders m/m at 12.30am (tomorrow morning)

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Topics: Market, Report

Market Update - 20th November 2018 - FAANGs Get Whacked & Drag Down AUD

Posted by Patrick Downes on November 20, 2018 at 8:37 AM

Financial markets had a brief respite from the selling last last week which helped the AUD make solid strides hitting a high of around 0.7330 vs. the Greenback in the early hours of Saturday morning, while Brexit issues have seen AUD/GBP surge to 6 month highs just shy of 0.5700. While AUD/GBP has held onto those gains, unfortunately though, AUD/USD has now come back to around the mid 0.72's following some further savage selling across both U.S and European equities overnight. The NASDAQ was again the biggest detractor falling by a whopping 3.03% which took the so called FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks to their lowest levels in about a year. Local equities are expected to open around 0.2% lower this morning as a result.

Ahead today we have Monetary Policy Meeting Minutes from the latest RBA meeting at 11.30am, followed by Inflation Report Hearings out of the U.K at around 9.00pm this evening. Both sets of data could provide some volatility for the AUD and AUD/GBP respectively, so those importers with AUD exposures would be best to hedge ahead of the data or risk adverse movements in the AUD.

Back to the AUD and some forecasts popping up over the past few days suggest we may have bottomed out with respect to AUD/USD but gains so far from the lows have been quite modest. I have seen some predictions on sites like Bloomberg et al that 0.7600 could be in the realm of possibility in the next 6-12 months. Obviously while bullish forecasts are great for importers please consider these are just predictions and the best strategy is to continue to hedge around your costing levels and ensure your importing remains profitable.

AUD EXCHANGE RATES:

AUD/USD – 0.7261

AUD/GBP – 0.5632

AUD/EUR – 0.6337

AUD/NZD – 1.0634

AUD/JPY – 81.758

USD/BTC – $4,870

OTHER MARKETS:

All Ords (XAO) – 5,786

Gold – A$1,678/oz

Silver –  A$19.78/oz

WTI – US$57.27/barrel

DATA RELEASES TODAY:

AUD – Monetary Policy Minutes at 11.30am

GBP – Inflation Hearings at 9.00pm

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Topics: Market, Report

Market Update - 15th November 2018 - AUD Edges Higher, But What Caused Bitcoin's Sudden Decline

Posted by Patrick Downes on November 15, 2018 at 8:46 AM

The AUD ticked marginally higher overnight vs all of the majors following flat wages growth yesterday, however the focus this morning is what caused Bitcoin to wake from its two month slumber and tumble over 10% in half an hour very early this morning. Speculation is that one of the bigger wallets may have sold their holding in favour of Bitcoin Cash (a Bitcoin fork and Bitcoin competitor), while other theories suggest more sinister motives like price manipulation etc. Bitcoin being such an illiquid, tightly held and small market suggests none of this is really out of the ordinary or even matters to financial markets more broadly which shrugged off the sudden decline in Bitcoin. The DXY or U.S Dollar index barely moved, while U.S equities finished the session around 0.76-0.90% lower, with the Nasdaq the worst performer yet again.

Commodity and Energy prices improved helping to support the AUD's modest gains overnight while more local economic data is due out this morning at 11.30am in Employment Change and the official Unemployment Rate. The market is anticipating around 20,000 new jobs to have been created, while the Unemployment Rate is tipped to have rise very marginally from 5.0% to 5.1%. This shouldn't impact the AUD too much, however a really strong or really poor number certainly will impact the AUD - so keep an eye on markets around 11.30am.

UK and U.S retail sales figures are out tonight.

AUD EXCHANGE RATES:

AUD/USD – 0.7203

AUD/GBP – 0.5533

AUD/EUR – 0.6361

AUD/NZD – 1.0616

AUD/JPY – 81.851

USD/BTC – $5,518

OTHER MARKETS:

All Ords (XAO) – 5,822

Gold – A$1,674/oz

Silver –  A$19.55/oz

WTI – US$56.40/barrel

DATA RELEASES TODAY:

AUD – Employment Change at 11.30am

GBP – Retail Sales m/m at 8.30pm

USD – Core Retail Sales m/m at 12.30am (tomorrow morning)

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Topics: Market, Report

Market Update - 14th November 2018 - NAB Business Confidence Disappoints Again, Wages Index At 11.30am

Posted by Patrick Downes on November 14, 2018 at 8:16 AM

NAB Business Confidence disappointed once again yesterday morning, coming in at 4, below the previous months reading and continuing a trend of declines which began way back in May 2017 when NAB Business Confidence peaked at 13. The soft Business Confidence numbers coincide with stubbornly poor retail sales figures, concerns about global growth and trade, tight credit and a quickly deteriorating local housing market which is unfortunately all dragging on our economy and the Aussie Dollar. The AUD is typically a currency that outperforms when optimism is high and growth strong, but right now we are seeing the opposite hence the AUD's decline over the better part of this year. In fact since late January we have dropped a full 900 points or 9 cents vs. the Greenback from 0.8100 to about 0.7200.

Overnight the AUD held up reasonably well finishing a tad higher vs. the Greenback than this time yesterday. U.S equities finished mostly lower by about 0.2%, while the NASDAQ followed Europe to finish higher. The German DAX was the best performer in Europe ending the session 1.3% higher. Commodities prices mostly held their ground excluding energy prices which were led lower by a rout in oil prices that saw WTI wipe around US$5 a barrel off its price. Expect the Saudis and OPEC to cut production and boost prices as the Saudi's look to increase the price of oil leading up to their IPO of Aramco in 2021.

The latest Wage Price Index is due out this morning at 11.30am with Aussie economists expecting to see flat growth in wages of about 0.6% for the latest quarter. Wages growth has been in decline since the GFC around 2008 when we averaged about a 1% increase in our salaries quarterly but in the space of 10 years we've seen that growth decline by about half as China slows and the great mining super cycle came to an end in the early part of this decade.

I like to be optimistic about things and think that this perfect storm of low wages growth, soft retail sales and deteriorating housing market is our economy bottoming out, sort of like being in the trough in a cycle with the climb to the peak ahead. Better times are certainly coming and the RBA agree with their forecasts continually ticking higher with each meeting.

AUD EXCHANGE RATES:

AUD/USD – 0.7178

AUD/GBP – 0.5529

AUD/EUR – 0.6362

AUD/NZD – 1.0639

AUD/JPY – 81.713

USD/BTC – $6,263

OTHER MARKETS:

All Ords (XAO) – 5,922

Gold – A$1,665/oz

Silver –  A$19.39/oz

WTI – US$55.19/barrel

DATA RELEASES TODAY:

AUD - Wage Price Index q/q at 11.30am

GBP - CPI y/y at 8.30pm

USD - Core CPI m/m at 12.30am (tomorrow morning)

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Topics: Market, Report

Market Update - 13th November 2018 - Investors Pile Into Greenback & Yen As Equities Take Another Hit

Posted by Patrick Downes on November 13, 2018 at 8:34 AM

Safe haven assets including the Yen and the Greenback performed well overnight as investors looked to protect themselves from declines across equities markets and commodities. U.S equities were led lower by the tech heavy NASDAQ which fell 2.7%, while in Europe stocks also declined with the DAX down the most, falling 1.77%. Overall it was a night to forget for equities and our local market is set to open 1.2% lower this morning.

AUD/USD which had briefly last week tested 0.7300 is now off by nearly 2% from those highs and seemingly looking vulnerable once again as investors retreat into their shells amidst trade ware fears and concerns about global growth. Iron ore prices which have been a good indicator for the AUD, remain elevated and near the highest levels since March, which does bode well for our local commodities stocks.

NAB Business Confidence is out today at 11.30am. Last months reading was 6 with the trend has been in decline ever since May 2017 when we hit 13. UK Average Earnings Index is released at 8.30pm with economists predicting a slight increase in wages in the U.K.

AUD EXCHANGE RATES:

AUD/USD – 0.7147

AUD/GBP – 0.5554

AUD/EUR – 0.6363

AUD/NZD – 1.0659

AUD/JPY – 81.381

USD/BTC – $6,302

OTHER MARKETS:

All Ords (XAO) – 6,027

Gold – A$1,673/oz

Silver –  A$19.52/oz

WTI – US$59.13/barrel

DATA RELEASES TODAY:

AUD - Nab Business Confidence at 11.30am

GBP - Average Earnings Index at 8.30pm

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Topics: Market, Report

Market Update - 12th November 2018 - AUD Drifts Lower With Equities, USD & CAD Payments Delayed Due To Remembrance Day

Posted by Patrick Downes on November 12, 2018 at 9:40 AM

AUD is off marginally this morning, but remains near 2 month highs thanks to positive sentiment and a good run last week.

U.S and European equities finished the week poorly, losing between 0.25% and 1.65% with the NASDAQ the worst performer yet again. Tech stocks in the U.S have been under immense pressure lately having run to blistering highs during 2018. Those exceptionally high Price to Earnings (PEs) and Price to Sales (PSs) multiples were always eventually going to come under scrutiny and that's precisely what's happened during October and the early part of November.

Payments in USD and CAD will be delayed by one day due to Bank Holidays in Canada and the U.S. tonight. USD and CAD payments will be sent tomorrow evening.

AUD EXCHANGE RATES:

AUD/USD – 0.7190

AUD/GBP – 0.5553

AUD/EUR – 0.6345

AUD/NZD – 1.0690

AUD/JPY – 81.897

USD/BTC – $6,290

OTHER MARKETS: 

All Ords (XAO) – 6,011

Gold – A$1,675/oz

Silver –  A$19.61/oz

WTI – US$59.93/barrel

DATA RELEASES TODAY:

CAD & USD - Bank Holiday for Remembrance/Veterans Day

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Topics: Market, Report

Market Update - 9th November 2018 - AUD At Highest Level In Nearly 2 Months

Posted by Patrick Downes on November 9, 2018 at 9:00 AM

Well, no report from me yesterday, however the big news is that U.S Congress now has some semblance of balance thanks to a mini blue Democratic wave which has given the Democrats control of the House of Reps. Equities and risk assets more broadly took that as a positive sign and we've since seen good gains across the board since Wednesday.

The Aussie dollar has also performed quite well with AUD/USD now trading at its highest level since mid September. While this sudden strong move does suggest more gains may be ahead, best not to throw caution to the wind and perhaps look at hedging a portion of your upcoming USD exposures following the two cent bounce, that's what I'd be doing. Obviously you've all got your own strategies in place, however mine has always been to take advantage of gains/surges in the value of the Aussie Dollar and that has served me well!

The U.S Federal Reserve raised rates again overnight to 2.25% in a pretty telegraphed move so we've seen little impact on the USD as a result. Equities though finished off about 0.25-0.5% in the U.S which isn't much surprise - equities markets generally haven't liked the U.S Feds higher rates.

AUD EXCHANGE RATES:

AUD/USD – 0.7237

AUD/GBP – 0.5524

AUD/EUR – 0.6355

AUD/NZD – 1.0713

AUD/JPY – 82.579

USD/BTC – $6,394

OTHER MARKETS: 

All Ords (XAO) – 6,015

Gold – A$1,685/oz

Silver –  A$19.88/oz

WTI – US$60.84/barrel

DATA RELEASES TODAY:

GBP - Manufacturing Production m/m & GDP at 8.30pm

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Topics: Market, Report

Market Update - 7th November 2018 - Vote Counting Begins In U.S Mid-Terms, AUD Up With Equities

Posted by Patrick Downes on November 7, 2018 at 8:29 AM

The Aussie Dollar advanced with U.S equities overnight while Gold and Oil retreated. In the U.S, election officials will begin to tally votes this morning in what could be the mostly hotly contested and biggest ever voter turnout to U.S mid-term elections in history. The vote is seen as a referendum on Trump's presidency so far and many pundits think the Democrats will take back the House, while the Senate will be far harder to retake given the low number of Republican held seats up for re-election.

Yesterday we saw the RBA not-surprisingly hold interest rates at 1.5%, but comments and forecasts suggest the next move will be higher sometime in late 2019-early 2020. The RBA noted "forecasts for economic growth in 2018 and 2019 have been revised up a little" while "business conditions are positive and non-mining business investment is expected to increase."

All eyes remain on the U.S mid terms today, with vote counting to continue through the day - we should have an idea of winners by around lunchtime.

AUD EXCHANGE RATES:

AUD/USD – 0.7194

AUD/GBP – 0.5484

AUD/EUR – 0.6298

AUD/NZD – 1.0802

AUD/JPY – 81.668

USD/BTC – $6,393

OTHER MARKETS: 

All Ords (XAO) – 5,958

Gold – A$1,697/oz

Silver –  A$20.12/oz

WTI – US$62.28/barrel

DATA RELEASES TODAY:

ALL – U.S Mid-Term Elections tonight and through tomorrow

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Topics: Market, Report

Market Update - 6th November 2018 - Markets Buoyant Ahead Of U.S Mid-Term Elections

Posted by Patrick Downes on November 6, 2018 at 9:21 AM

Equities in the U.S for the most part advanced with the S&P and Dow up 0.56% and 0.76% respectively, however the tech heavy NASDAQ did continue to remain volatile losing 0.38% by the close. The AUD moved higher with equities and firmer commodity prices while local equities look set to open the day around 0.3% higher.

A big 24 hours ahead for the Aussie dollar and markets more broadly with U.S midterm elections taking place tonight while the counting and tallying of those votes will take place through the day tomorrow. In addition to mid terms we have the RBA cash rate decision and the accompanying rate statement at 2.30pm this afternoon, however no changes to our interest rates are expected meaning all eyes will be on the U.S tonight.

What could happen to markets tomorrow? 

I've been trying to think through the possible scenarios for markets tomorrow if the Democrats take control of one or both of the Senate and House of Reps. Bookmakers are thinking that the Republicans will retain control of the Senate, while Democrats will retake control of the House. Should this be the case a large chunk of Trump's power will be checked by the House of Reps which would suggest his trade war against China may come to a resolution sooner rather than later. This should be good for markets given that a large amount of uncertainty this year has been as a result of Donald Trump's trade spats and divisive rhetoric aimed mostly towards China. But there is also a fear that if the House is taken by Democrats then the chance of Trump getting his second round of tax cuts (whether they are fair or not) would be unlikely and therefore a negative for U.S equities and growth.

Anyway, its all speculation at this point, lets see where things are at tomorrow. But expect quite a high level of volatility over the next 24 hours. If you have urgent payments and you're worried about volatility then I'd certainly suggest making payments today ahead of U.S mid terms tonight. Remember what happened during Brexit!

AUD EXCHANGE RATES:

AUD/USD – 0.7181

AUD/GBP – 0.5497

AUD/EUR – 0.6290

AUD/NZD – 1.0781

AUD/JPY – 81.330

USD/BTC – $6,376

OTHER MARKETS: 

All Ords (XAO) – 5,904

Gold – A$1,707/oz

Silver –  A$20.31/oz

WTI – US$62.76/barrel

DATA RELEASES TODAY:

AUD – RBA Rate Statement & Cash Rate Decision at 2.30pm

ALL - U.S Mid-Term Elections tonight and through tomorrow

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Topics: Market, Report

Market Update - 5th November 2018 - AUD Posts Solid Week, RBA Cash Rate Tomorrow & U.S Mid Terms Next Up

Posted by Patrick Downes on November 5, 2018 at 9:24 AM

The Aussie dollar finished the week in good form adding around 2% vs. the Greenback and holding stable vs. the Euro and GBP. The turnaround in fortunes for the Aussie dollar was due to stronger than expected trade balance numbers on the back of surging exports while producer prices (which were released on Friday) leapt 0.8% in the latest quarter suggesting producers are more comfortable charging higher prices for their goods. All this in conjunction with a more optimistic view of Trump being able to do a trade deal with China caused market sentiment to improve quite dramatically.

Not a great deal of economic data is out today however we do have the all important RBA cash rate decision tomorrow at 2.30pm. Whilst the market is expecting no change to interest rates which have been held steady at 1.5% since August 2016 we will be watching closely the RBA's accompanying rate statement for commentary on the economy, the housing sector and global trade. Also, we'll be looking for hints as to what the RBA's next rate move might be, however they will likely drip feed their hints over the course of months in order to not shock the market and see a sudden surge in the AUD - which at its current low level is supporting our export economy of mining, education and tourism.

AUD EXCHANGE RATES:

AUD/USD – 0.7158

AUD/GBP – 0.5492

AUD/EUR – 0.6281

AUD/NZD – 1.0800

AUD/JPY – 81.030

USD/BTC – $6,389

OTHER MARKETS: 

All Ords (XAO) – 5,935

Gold – A$1,713/oz

Silver –  A$20.50/oz

WTI – US$62.89/barrel

DATA RELEASES TODAY:

AUD - MI Inflation Gauge m/m at 11.00am

GBP - Services PMI at 8.30pm

USD - ISM Non-Manufacturing at 2.00am

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Topics: Market, Report

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