Compass Global Markets' Blog

Market Update - 20th July 2018 - Strong AU Employment Gives AUD Short Lived Spike

Posted by Patrick Downes on July 20, 2018 at 8:35 AM

Strong employment numbers yesterday initially boosted the AUD however the gains were short lived with risk aversion creeping back into markets in the afternoon and through the evening. Putting aside the short lived gains, the data was positive and should be noted as 50K new jobs were created in the month of June - this marked the best month since December of last year when jobs numbers grew by nearly 62K. So while areas like housing and retail continue to battle, jobs growth has been reasonably robust which bodes well for the Aussie economy in the long run.

In other news, commodities moved lower after a good run yesterday while U.K retail sales declined and European and U.S equities finished the overnight session mostly lower.  Trump is still front page news everywhere as he continues to rock the modus operandi of the global economy and trade, but like many I'll be hoping the U.S Democratic party can take a large number of seats in the upcoming mid-term elections in November.

AUD EXCHANGE RATES:

AUD/USD – 0.7337

AUD/GBP – 0.5632

AUD/EUR – 0.6297

AUD/NZD – 1.0884

AUD/JPY – 82.55

USD/BTC – $7,442

OTHER MARKETS: 

All Ords (XAO) – 6,355

Gold – A$1,662/oz

Silver –  A$20.82/oz

WTI – US$67.51/barrel

DATA RELEASES TODAY:

None

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Topics: Report, Market

Market Update - 18th July 2018 - Equities Rally, GBP Falls On Weak Employment Data

Posted by Patrick Downes on July 18, 2018 at 9:43 AM

Just a very short one this morning as I'm running a bit behind schedule. In the U.K jobs and wages data was released overnight and showed little growth in wages and employment but a ratcheting up in the number of people claiming unemployment benefits - the result helped AUD/GBP to move through 0.5600. In the U.S on Monday night, retail sales beat estimates for the latest month whilst the previous month was also revised higher as new/better information came to light. The U.S has seen a resurgence in retail sales numbers over the past few months which bodes well for the U.S economy and retail in general which has been in the doldrums of late.

U.S and European equities moved higher overnight with local ASX futures suggesting we'll open around half a percent higher this morning. Commodities remain under pressure, particularly Zinc which is used to galvanise steel, however metals in general may be due for a better period ahead given the correction we've seen over the past few months.

AUD EXCHANGE RATES:

AUD/USD – 0.7365

AUD/GBP – 0.5610

AUD/EUR – 0.6313

AUD/NZD – 1.0877

AUD/JPY – 83.191

USD/BTC – $7,333

OTHER MARKETS: 

All Ords (XAO) – 6,288

Gold – A$1,662/oz

Silver –  A$21.10/oz

WTI – US$66.88/barrel

DATA RELEASES TODAY:

GBP - CPI at 6.30pm

USD - Building Permits at 10.30pm

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Topics: Report, Market

Market Update - 17th July 2018 - AUD Unchanged, While Commodities & Equities Remain Under Pressure

Posted by Patrick Downes on July 17, 2018 at 8:37 AM

The Aussie dollar is unchanged overnight and remains more or less anchored around the 0.7400 level vs. the Greenback and just under 0.5600 vs. the Great British Pound. Equities across Europe and the U.S traded flat overnight while commodities again look to have lost ground amid sustained selling and profit taking after a very good run during 2016-2017. Iron ore which is perhaps our most crucial export has continued to trade sideways since March with the current price for the benchmark 62% fines hovering around US$65 a tonne, which is profitable for most industry participants.

Geo-Politics: Trump has worried Western and U.S leaders at home appearing next to Putin last night at a press conference while calling the Mueller probe a 'witch hunt'. The move from Trump to continually side with Russia instead of traditional allies in the West is strange and is causing concern for markets and trade in general which is dragging on markets.

Ahead today is local Monetary Policy Minutes from the RBA's last meeting. The minutes are a more in depth look at the thought process of the RBA with respect to the economy and future moves in interest rates and so is watched quite closely by traders and economists alike. As such we could see some increased AUD volatility around 11.30am this morning. Jobs data is released in the U.K tonight which will have an impact on AUD/GBP.

AUD EXCHANGE RATES:

AUD/USD – 0.7398

AUD/GBP – 0.5583

AUD/EUR – 0.6313

AUD/NZD – 1.0927

AUD/JPY – 83.105

USD/BTC – $6,650

OTHER MARKETS: 

All Ords (XAO) – 6,326

Gold – A$1,672/oz

Silver –  A$21.28/oz

WTI – US$67.16/barrel

DATA RELEASES TODAY:

AUD - Monetary Policy Meeting Minutes at 11.30am

GBP - Average Earnings Index at 6.30pm

USD - Fed Chair Powell Testifies at 12.00am

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Topics: Report, Market

Market Update - 16th July 2018 - Markets Advance, While Gold Declines As Risk Appetite Returns

Posted by Patrick Downes on July 16, 2018 at 9:10 AM

U.S and European stocks, the AUD and commodities all moved higher Friday evening helping markets to finish on a positive note in an otherwise less than positive week for markets.

A closer look at AUD/USD and we are hovering around the 0.7400 handle after finding a bit of support in the 0.7300's. The medium term trend for AUD/USD however remains pretty bearish with the currency pair off some 6 cents or 600 points since the beginning of February. Longer term (which I'm calling back to early 2016) we were in a cyclical uptrend however that appears to have ceased when we failed to hold 0.7600 in late April and then again in the middle of June. Where to for the Aussie from here is anyone's guess but views range from 0.8000+ on the high side and 0.6500 on the low side. I prefer to think we will continue to hold a range between 0.7300 and 0.8000, with the AUD supported at 0.7300 by strong commodities prices and constrained at 0.8000 by rising U.S interest rates.

Trump meets with Putin later this evening in Helsinki while his Trade War with China persists. I'm a generally optimistic fellow and hence think that we may have seen the first and only shot in the Trump/China trade war with common sense hopefully prevailing later this month. Should that happen we should see a nice bounce in commodities which should flow on to a higher AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.7398

AUD/GBP – 0.5587

AUD/EUR – 0.6329

AUD/NZD – 1.0947

AUD/JPY – 83.17

USD/BTC – $6,333

OTHER MARKETS: 

All Ords (XAO) – 6,351

Gold – A$1,673/oz

Silver –  A$21.33/oz

WTI – US$69.77/barrel

DATA RELEASES TODAY:

CNY - GDP q/y at 12.00pm

USD - Retail Sales m/m at 10.30pm

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Topics: Report, Market

Market Update - 13th July 2018 - AUD, Equities & Commodities Rebound Following Trump Trade Sell-Off On Wednesday

Posted by Patrick Downes on July 13, 2018 at 8:09 AM

No report from me yesterday as a result of a very busy morning. But what you missed was a global risk sell off following Trump's announcement he'd sting China with potentially as much as another US$200billion in tariffs. The market however rebounded yesterday afternoon following the knee-jerked sell-off which sent equities, the AUD and commodities sharply lower. Oil perhaps was the only commodity not to retrace losses but that's as a result of another very different tweet from Trump.

News so far this week has related to Trump bashing NATO, China and Oil producing countries...while in Canada they raised their interest rates to 1.5%, on par with the RBA here in Australia. Both Canada and Australia lag U.S rates by half a percent - how long this discrepancy stays in place is anyone's guess but from memory the last stint lasted only a brief moment in time.

No economic news out today - but markets generally look healthier with European and U.S stocks moving higher overnight.

AUD EXCHANGE RATES:

AUD/USD – 0.7384

AUD/GBP – 0.5587

AUD/EUR – 0.6310

AUD/NZD – 1.0911

AUD/JPY – 82.100

USD/BTC – $6,137

OTHER MARKETS: 

All Ords (XAO) – 6,349

Gold – A$1,683/oz

Silver –  A$21.53/oz

WTI – US$69.54/barrel

DATA RELEASES TODAY:

No economic data out today.

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Topics: Report, Market

Market Update - 11th July 2018 - Base Metal Commodities Slide Again Lead By Zinc & Iron Ore, AUD Down As A Result

Posted by Patrick Downes on July 11, 2018 at 8:31 AM

The Aussie Dollar fell marginally overnight following another sell-off in base metals that saw Zinc lead the pack lower testing 2,600USD a tonne after reaching as high as 3,600USD a tonne in late February. Iron ore and Copper also fell and remain very much out of favour since Trump started to postulate about trade war and tariffs in Feb. Overall we're down about half a percent vs. the USD and EUR while AUD/GBP has fallen around 1% following big gains on Monday evening.

U.S equities finished the session higher but have since lost ground on the futures market in the early part of this morning which will drag on the ASX - the ASX looks set to open about 0.2% lower on the back of this and the weaker commodities prices.

Economic data out today included home loan numbers and Westpac Consumer Sentiment - both are out this morning and probably won't have any more than a minimal impact on the AUD today. Home loan numbers are expected to contract by 1.9% which would be a 6th straight month of contraction in the housing and home loans market. Westpac Consumer Sentiment doesn't have a forecast but if the last year of data is anything to go by then expect more flat numbers here.

AUD EXCHANGE RATES:

AUD/USD – 0.7433

AUD/GBP – 0.5603

AUD/EUR – 0.6336

AUD/NZD – 1.0900

AUD/JPY – 82.498

USD/BTC – $6,339

OTHER MARKETS: 

All Ords (XAO) – 6,366

Gold – A$1,689/oz

Silver –  A$21.60/oz

WTI – US$73.06/barrel

DATA RELEASES TODAY:

AUD – Westpac Consumer Sentiment at 10.30am

AUD - Home Loans m/m at 11.30am

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Topics: Report, Market

Market Update - 9th July 2018 - AUD/USD At Two & A Half Week Highs As Markets Bounce

Posted by Patrick Downes on July 9, 2018 at 8:35 AM

A busy week last week in which we saw Aussie retail sales higher and the local cash rate held steady at 1.5% is followed by a pretty quiet one this week. U.S non-farm payrolls (jobs numbers) rounded out the week on Friday night with the U.S jobs market remaining buoyant as 213,000 new jobs were created last month. Surprisingly however that growth in jobs was offset by an uptick in the unemployment rate from 3.8% to 4% which took a little of the shine of the report. The rise in the unemployment rate  caused the U.S Dollar to sell off which helped boost the AUD to fresh 3 week highs above 0.7400 vs. the Greenback.

U.S and European stocks rose on Friday night while commodities prices also performed better. Gold was the loser off quite substantially as risk aversion took a back seat. Not a lot of economic data out this week other than U.S CPI on Thursday night. CPI is a key number that the Federal Reserve watch in order to determine interest rates as a result volatility could increase going into Thursday night.

AUD EXCHANGE RATES:

AUD/USD – 0.7432

AUD/GBP – 0.5583

AUD/EUR – 0.6324

AUD/NZD – 1.0865

AUD/JPY – 82.180

USD/BTC – $6,730

OTHER MARKETS: 

All Ords (XAO) – 6,355

Gold – A$1,688/oz

Silver –  A$21.59/oz

WTI – US$72.38/barrel

DATA RELEASES TODAY:

JPY - BOJ Gov Kuroda Speaks at 10.30am

EUR - ECB President Draghi Speaks at 11.00pm

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Topics: Report, Market

Market Update - 5th July 2018 - AUD Steady Thanks To Better Retail Sales Figures

Posted by Patrick Downes on July 5, 2018 at 8:35 AM

Local retail sales figures released yesterday surprised to the upside with the official figure coming in at 0.4% instead of the forecast 0.3%. The Aussie dollar moved initially higher on the more positive retail sales figure reaching 0.7424 immediately following the economic data before retreating back to its starting point around the high 0.73's. Retailers would have breathed a sigh of relief yesterday with the economic data suggesting that consumers haven't completely retreated to the internet for their consumer goods and that retailers may yet make a comeback after a tough period.

The Aussie dollar is more or less unchanged since yesterday, however U.S preliminary job numbers tonight along with ISM non-manufacturing PMI could provide some further headwinds for AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.7383

AUD/GBP – 0.5579

AUD/EUR – 0.6331

AUD/NZD – 1.0915

AUD/JPY – 81.567

USD/BTC – $6,655

OTHER MARKETS: 

All Ords (XAO) – 6,273

Gold – A$1,701/oz

Silver –  A$21.78/oz

WTI – US$72.78/barrel

DATA RELEASES TODAY:

USD – ADP Non-Farm Employment Change at 10.15pm

USD - ISM Non-Manufacturing PMI at midnight

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Topics: Report, Market

Market Update - 4th July 2018 - RBA Keeps Rates On Hold At 1.5%, But Higher Rates On The Way

Posted by Patrick Downes on July 4, 2018 at 9:38 AM

The RBA kept rates on hold yesterday at 1.5%, extending to 22 months the streak at which rates have been on hold at 1.5% - also a record low. Interest rates could however start rising perhaps in the next 12 months with inflation at just over 2%. The RBA noted in their statement "a gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in 2018." The RBA's target for inflation has typically been 2-3% so an increase into the 2-3% range could signal the next move in rates to be upward. What does this mean for the Aussie dollar? Well, its potentially a bullish sign and the market agrees. AUD/USD and the other major crosses all moved higher by around 0.5-1% following the RBA statement yesterday afternoon.

In other news European stocks gained, while U.S stocks lost ground. Asian stocks finished yesterdays session mixed. Commodities prices remain under pressure, with Zinc, Nickel, Copper and Iron ore all losing ground. Uranium prices rallied again supporting the narrative that they have bottomed after a 10 year bear market.

Trade balance figures along with retail sales are due out today. The RBA and myself as a MYER shareholder will be hoping for a bounce in retail sales, but very indebted households and rising rates could well be a catalyst for continued poor retail sales numbers.

AUD EXCHANGE RATES:

AUD/USD – 0.7382

AUD/GBP – 0.5595

AUD/EUR – 0.6331

AUD/NZD – 1.0928

AUD/JPY – 81.594

USD/BTC – $6,468

OTHER MARKETS: 

All Ords (XAO) – 6,302

Gold – A$1,697/oz

Silver –  A$21.70/oz

WTI – US$73.16/barrel

DATA RELEASES TODAY:

AUD – Retail Sales at 11.30am

AUD – Trade Balance at 11.30am

GBP – Services PMI at 6.30pm

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Topics: Report, Market

3rd July 2018: RBA Announcement Cash Rate unchanged at 1.50 per cent.

Posted by Thomas Su on July 3, 2018 at 2:31 PM

Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economic expansion is continuing. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. The Chinese economy continues to grow solidly, with the authorities paying increased attention to the risks in the financial sector and the sustainability of growth. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States. There have also been strains in a few emerging market economies, largely for country-specific reasons.

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