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Patrick Downes

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Market Update - 15th March 2018 - AUD Breaks 0.7900 Briefly Overnight Only To Fall Away

Posted by Patrick Downes on March 15, 2018 at 8:28 AM

The Aussie dollar briefly eclipsed 0.7900 around 11.30pm last night as the latest batch of U.S retail sales and producer prices figures were released to the market, but the momentum didn't last as producer prices increased while retail sales declined - essentially offsetting each other and creating a business as usual scenario for the Aussie dollar. AUD/USD has been stuck in a 0.7700-0.8000 range now for the best part of 6 weeks and again we look for a catalyst for a move out of this range to occur. With no data due out for the rest of this week the next likely catalyst is the U.S FOMC meeting next Thursday morning in which the U.S Federal Reserve will decide to move interest rates higher to 1.75% or keep them at the same level around 1.5%.

Looking at commodities and equities and we still see a picture of volatility as a direct result of Trumps Tariffs, with most markets moving around in pretty choppy fashion. Iron ore, copper and lithium prices moved higher overnight while zinc and nickel lost ground along with U.S equities which finished lower; the Dow Jones was the worst performer down by as much as 1%.

Some tier 2 local economic data is out today in MI inflation expectations and the RBA Bulletin which "contains relevant articles, speeches, statistical tables, and provides detailed analysis of current and future economic conditions from the bank's viewpoint" - thanks ForexFactory.com for that summary.

AUD EXCHANGE RATES:

AUD/USD – 0.7874

AUD/GBP – 0.5639

AUD/EUR – 0.6366

AUD/NZD – 1.0741

AUD/JPY – 83.710

USD/BTC – $8,215

COMMODITIES/EQUITIES: 

All Ords (XAO) – 6,042

Gold – A$1681/oz

Silver –  A$21.00/oz

WTI – US$60.96/barrel

DATA RELEASES TODAY:

AUD - MI Inflation Expectations at 11.00am

AUD - RBA Bulletin at 11.30am

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Topics: Report, Market

Market Update - 14th March 2018 - AUD Struggles To Break Through 0.7900...Again

Posted by Patrick Downes on March 14, 2018 at 9:27 AM

For the last two sessions the AUD has failed to break through 0.7900 vs. the Greenback suggesting a great deal of resistance at this crucial big figure level. U.S CPI came in on expectations overnight at 0.2% for the month of February which probably explains some of the inability of AUD/USD to push through 0.7900. A near term catalyst for the move could be tonight's U.S retail sales and producer prices released around 11.30pm - however we'd have to see a pretty poor number for a break above 0.7900 - alternatively another bullish night for commodities and equities could have a similar result.

Aussie home loans figures were out yesterday and disappointed, coming in a whole 1% below expectations as home loans numbers contracted a further 1.1%, additionally NAB business confidence also declined from 11 to 9 in the latest reading released yesterday.  Out this morning is Westpac consumer sentiment figures.

AUD EXCHANGE RATES:

AUD/USD – 0.7855

AUD/GBP – 0.5624

AUD/EUR – 0.6338

AUD/NZD – 1.0722

AUD/JPY – 83.637

USD/BTC – $9,092

COMMODITIES/EQUITIES: 

All Ords (XAO) – 6,077

Gold – A$1687/oz

Silver –  A$21.11/oz

WTI – US$60.83/barrel

DATA RELEASES TODAY:

CNY - Industrial Production y/y at 1.00pm

EUR - ECB President Draghi Speaks at 7.00pm

USD - Core Retail Sales and Producer Prices at 11.30pm

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Topics: Report, Market

Market Update - 13th March 2018 - AUD Higher Despite Weaker Commodities Prices, But Risks This Evening

Posted by Patrick Downes on March 13, 2018 at 9:42 AM

Despite substantially weaker commodities prices over the weekend and yesterday, the AUD managed to make gains almost across the board. In fact AUD/USD was up nearly 100 points since my Friday report while the AUD was up nearly 1% vs. the GBP, EUR and JPY. Base metals which are of course a lifeblood of the Australian economy have all come off a great deal over the past few weeks & following Trump's announcement to put tariffs on steel and aluminium, however when you consider that most of the base metals had had a solid run in the lead up to Trumps Tariffs then you could well see the falls as merely profit taking or returning to the mean before the next leg up. I remain bullish on commodities and therefore also the AUD as lets be honest Australia is built on mining, education and housing. Two of those three are not going away and while higher interest rates may impact the housing market you'd have to think mining and our export of education could well pick up the slack if and when required.

The U.K Parliament delivers its Annual Budget tonight, so it's a no brainer that this will have an impact on AUD/GBP - clients wishing to reduce risk on upcoming GBP exposures may be wise to hedge in advance of the Annual Budget release. Similar scenario with U.S CPI at 11.30pm tonight - CPI is of course the main factor with respect to the U.S Fed's decision to raise rates if at all, and a bullish number could take the chance of a rate hike well past 95% when the Fed meets again next Thursday morning.

AUD EXCHANGE RATES:

AUD/USD – 0.7872

AUD/GBP – 0.5660

AUD/EUR – 0.6379

AUD/NZD – 1.0789

AUD/JPY – 83.764

USD/BTC – $8,925

COMMODITIES/EQUITIES: 

All Ords (XAO) – 6,101

Gold – A$1680/oz

Silver –  A$21.00/oz

WTI – US$60.24/barrel

DATA RELEASES TODAY:

GBP - Annual Budget Release at 10.30pm

USD - CPI at 11.30pm

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Topics: Report, Market

Market Update - 9th March 2018 - Trump Tariffs Get Go Ahead, Commodities Prices Decline While USD Surges

Posted by Patrick Downes on March 9, 2018 at 10:15 AM

The USD surged higher and commodities fell overnight as Trump followed through with plans to set high tariffs on the importation of steel and aluminium into the U.S while exempting immediate neighbors Canada and Mexico for 'national security' reasons. AUD/USD fell back below 0.7800 on the wholesale market while the USD moved higher against the Yen and EURO. Since Trump mentioned the tariff in early March commodities have been sinking with zinc, nickel, copper and iron ore all getting belted on the prospects that these tariffs may kick off a trade war with China who imports much of the worlds base metals but also the European Union and many other Asian nations. Personally I think it's quite overdone and considering much of the U.S's steel imports come from Canada (17%), the European Union (15%) and Mexico (9%), with two out of those three already exempted from the tariff then the tariffs may have little impact on the raw materials themselves. The real concern is whether China, Japan and Korea retaliate with their own trade tariffs, but this is a still unknown and perhaps a reason for the weakness in commodities prices. Markets hate uncertainty.

Some Chinese economic data is out today in consumer and producer prices and these always have some impact on the Aussie dollar and the Yuan. This data is followed by U.S non-farm payrolls numbers due early tomorrow morning which are typically seen as the Number 1 bit of economic data out of the U.S each month. Obviously quite a bit of risk for AUD/USD going into tonight particularly given the break below 0.7800 and the weaker commodities prices.

AUD EXCHANGE RATES:

AUD/USD – 0.7786

AUD/GBP – 0.5635

AUD/EUR – 0.6324

AUD/NZD – 1.0723

AUD/JPY – 82.733

USD/BTC – $9,404

COMMODITIES/EQUITIES: 

All Ords (XAO) – 6,046

Gold – A$1697/oz

Silver –  A$21.19/oz

WTI – US$60.24/barrel

DATA RELEASES TODAY:

CNY - CPI & PPI at 12.30pm

JPY - Interest Rate Decision & Monetary Policy Statement

GBP - Manufacturing Production at 8.30pm

USD - Non-Farm Payrolls & Unemployment Rate at 12.30am (tomorrow morning)

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Topics: Report, Market

Market Update - 8th March 2018 - Markets Rattled By Trump Economic Adviser Cohn's Departure

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

So some key things happened yesterday. 1. Quarterly GDP was released by the ABS and showed a seasonally adjusted number of 0.4% for the final quarter of 2017, which for the calendar year came in at a seasonally adjusted 2.4% annual GDP growth. While the figure can't quite be called a shocker it was the third quarter in a row of declining GDP growth and probably therefore explains much of the reasoning behind the RBAs decision earlier in the week to hold interest rates at 1.5%. The AUD is mostly stable despite the weaker GDP numbers.

In the U.S it appears the Trump administration is hell bent on tariffs and that resulted in Gary Cohn - the chief Economic Advisor to Donald Trump - quitting yesterday in frustration and presumably to distance himself from the administration if indeed things turn sour for the U.S economy in the coming months. Trump's White House has been a revolving door of advisers and press secretaries and this is certainly no surprise, but the fact that Cohn quit certainly rattled markets and suggests nothing will stop Trump from instigating a trade war.

Ahead today is local trade balance figures at 11.30am.

AUD EXCHANGE RATES:

AUD/USD – 0.7819

AUD/GBP – 0.5624

AUD/EUR – 0.6300

AUD/NZD – 1.0733

AUD/JPY – 82.932

USD/BTC – $9,826

COMMODITIES/EQUITIES: 

All Ords (XAO) – 6,005

Gold – A$1695/oz

Silver –  A$21.10/oz

WTI – US$61.26/barrel

DATA RELEASES TODAY:

AUD – Trade Balance at 11.30am

EUR - Minimum Bid Rate (Interest Rates) at 11.45pm

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Topics: Report, Market

Market Update - 7th March 2018 - AUD/USD Moves Higher Despite Continued Weak Retail Sales

Posted by Patrick Downes on March 7, 2018 at 9:49 AM

Despite weaker than expected retail sales figures yesterday and a more bearish than anticipated RBA the Aussie Dollar has managed to move higher against the USD, Pound & Euro overnight. The RBA left rates on hold again noting inflation remains below their target and that current interest rates are helping to support the local economy. However there is clearly still work to be done given that retail sales figures came in pretty poor yesterday morning.

Commodity markets were mixed overnight with oil moving higher along with iron ore whilst zinc, copper and the other bass metals were reasonably flat. US equities were generally higher with the best performing index being the NASDAQ up about half a percent, while the Dow was up only a fraction of a percent.

We have more local economic data out today with quarterly GDP figures due at 11:30 a.m. The market is expecting to see around half percent growth in GDP which will obviously be eagerly anticipated buy not only market participants but also the RBA. Later this evening we will see preliminary US ADP non farm payrolls figures which are anticipated to come in around 194,000 new jobs. This figure is released ahead of the official Government number released Friday evening and can therefore result in movements in the USD as the ADP figure usually matches up pretty well with the official non-farm government figure.

AUD EXCHANGE RATES:

AUD/USD – 0.7824

AUD/GBP – 0.5632

AUD/EUR – 0.6306

AUD/NZD – 1.0726

AUD/JPY – 83.067

USD/BTC – $10,769

COMMODITIES: 

Gold – A$1704/oz

Silver –  A$21.40/oz

WTI – US$62.22/barrel

DATA RELEASES TODAY:

AUD - Quarterly GDP at 11.30am

USD – ADP Non-Farm Payrolls at 12.15am

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Topics: Report, Market

Market Update - 5th March 2018 - AUD & Markets Finish The Week Flat

Posted by Patrick Downes on March 5, 2018 at 8:43 AM

The Aussie dollar is little changed since Friday morning while equities and commodities finished slightly ahead over the weekend. Markets remain volatile though with Trump's tariffs weighing on investor sentiment until some clarity is provided with respect to what the tariffs may be, in what form and applied to what markets.

No local economic data is out today however later this evening we'll see the release of UK Services PMI and US Non-Manufacturing data. Locally the data kicks off tomorrow with retail sales and the RBA cash rate decision at 11.30am and 2.30pm respectively. Goes without saying retail sales and interest rates are key to the Aussie's directions and markets will be on high alert tomorrow between 11-3 AEST.

AUD EXCHANGE RATES:

AUD/USD – 0.7772

AUD/GBP – 0.5625

AUD/EUR – 0.6293

AUD/NZD – 1.0715

AUD/JPY – 81.948

USD/BTC – $11,477

COMMODITIES: 

Gold – A$1701/oz

Silver –  A$21.25/oz

WTI – US$61.35/barrel

DATA RELEASES TODAY:

GBP – Services PMI at 8.30pm

USD - ISM Non-Manufacturing PMI at 2.00am

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Topics: Report, Market

Market Update - 2nd March 2018 - Markets Sent Into A Tail Spin As Trump Talks Tariffs & Trade Wars

Posted by Patrick Downes on March 2, 2018 at 8:32 AM

Donald Trump rattled markets overnight sending the AUD and commodities lower and equities into a tailspin which erased about 1-1.5% from U.S and European indices. His latest hair brained plan is to impose huge tariffs on steel and aluminium coming into the U.S in a short term bid to boost business confidence (and votes) in the U.S steel and aluminium industries, however the tariffs if imposed are almost certain to trigger a trade war with Europe, China and Canada, the biggest supplier of steel into the U.S. 

Equities look set to open lower again today here in Aus while AUD/EUR has fallen about 40 or so points since yesterday. AUD/EUR is heading towards a critical level around 0.6300 and if this doesnt hold we could well be seeing AUD/EUR test previous lows around 0.6200.

AUD EXCHANGE RATES:

AUD/USD – 0.7757

AUD/GBP – 0.5628

AUD/EUR – 0.6325

AUD/NZD – 1.0695

AUD/JPY – 82.435

USD/BTC – $10,973

COMMODITIES: 

Gold – A$1697/oz

Silver –  A$21.26/oz

WTI – US$61.24/barrel

DATA RELEASES TODAY:

GBP - Prime Minister May Speaks

GBP - Construction PMI at 8.30pm

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Topics: Report, Market

Market Update - 1st March 2018 - AUD/USD Declines For A Second Straight Night On Powell Testimony & Weaker Commodities Prices

Posted by Patrick Downes on March 1, 2018 at 9:16 AM

No report from me yesterday as I had quite a busy morning and was under the pump booking payments and what not.

What you missed was a slump in AUD/USD Wednesday night and unfortunately a further fall in AUD/USD overnight to be below 0.7800 this morning. Comments from Fed Chairman Powell at his inaugural Congressional Testimony suggest as many as 3-4 rate hikes are on the cards in the U.S this year which should support the US Dollar. However what should happen and what does happen is often quite different and that can be seen in AUD/USD at current levels. Strong commodities prices and buoyant demand from China for raw materials is essentially whats keeping the Aussie dollar up - and in my opinion should continue to support the Aussie Dollar. Barring a global meltdown.

However as I've mentioned before there are two camps of thought - one who believe AUD/USD has to go lower as US rates rise and the other who believe AUD/USD can move higher with commodities prices and growth around the world.

AUD/EUR which has been in decline for since Feb 2017 appears to have found support around the mid 0.63's and it did manage to hold this level throughout the whole of February. Where AUD/EUR heads from here is anyones guess but a break below 0.6350 could see AUD/EUR retreat to 0.6200. A break above on perhaps poor European growth figures could see it test 0.6600.

AUD EXCHANGE RATES:

AUD/USD – 0.7760

AUD/GBP – 0.5639

AUD/EUR – 0.6363

AUD/NZD – 1.0763

AUD/JPY – 82.788

USD/BTC – $10,528

COMMODITIES: 

Gold – A$1698/oz

Silver –  A$21.15/oz

WTI – US$61.45/barrel

DATA RELEASES TODAY:

AUD - Private Capital Expenditure at 11.30am

GBP - Manufacturing PMI at 8.30pm

USD - Fed Chairman Powell Testifies (again) at 2.00am (tomorrow morning)

USD - ISM Manufacturing PMI at 2.00am

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Topics: Report, Market

Market Update - 27th February 2018 - Equities & Commodities Post Further Gains, AUD Stable Ahead Of Maiden Powell Testimony

Posted by Patrick Downes on February 27, 2018 at 8:36 AM

Markets continue to recover lost ground leading up to the maiden congressional testimony of incoming Federal Reserve Chairman Jerome Powell. Many believe Powell will provide the markets with some comfort by announcing he'll be comfortable with higher inflation for longer before raising U.S interest rates. U.S equities led by the DOW piled on gains in excess of 1% and have now recovered almost all of the losses during the flash crash earlier this month. Jerome Powell is set to testify to the U.S congress early tomorrow morning and we can expect some increased volatility in forex and equity markets leading up to and during the testimony.

The AUD is reasonably stable thanks to rising commodities prices and iron ore continues to hold in the high US$70's a tonne.

AUD EXCHANGE RATES:

AUD/USD – 0.7853

AUD/GBP – 0.5621

AUD/EUR – 0.6375

AUD/NZD – 1.0732

AUD/JPY – 83.970

USD/BTC – $10,333

COMMODITIES: 

Gold – A$1698/oz

Silver –  A$21.21/oz

WTI – US$63.95/barrel

DATA RELEASES TODAY:

USD - Core Durable Goods Orders at 12.30am

USD - Fed Chair Powell Testifies at 12.30am

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Topics: Report, Market

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