Compass Global Markets' Blog

Market Update - 4th February 2019 - Commodities Prices Continue Cracking Start To 2019

Posted by Patrick Downes on February 4, 2019 at 8:36 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

AUD Unchanged:

While the AUD remains little changed since last Friday, the price of iron ore (our number 1 export) has continued it's stellar run busting through the psychological level of 600 Chinese Yuan or roughly US$90 a tonne. Iron ore has been ripping higher on the double whammy of progressive trade talks between China and the U.S and the recent tragic Vale tailings dam disaster which will put a significant dint in the global supply of iron ore as Vale decommissions 10 of it's 'upstream' tailings dams.

US Jobs Numbers:

The only economic data released over the weekend was Friday nights U.S jobs numbers which beat estimates yet again, coming in at 304K new jobs while (according to The Guardian) also setting a record of 100 consecutive months of job creation. The unemployment rate however bucked the trend unexpectedly rising from 3.9% to 4% in the latest reading. U.S equities markets were mixed with the Nasdaq down a quarter of a percent while the S&P and Dow rose very marginally; European stocks also finished higher.

Metals Prices Continue To Surge:

Our local market is set to open 0.3% higher, while the AUD should continue to get a bit of a boost from higher iron ore and commodities prices more broadly. Many of the metals which performed so poorly during 2018 have started 2019 in much better fashion, with Zinc and Copper up 14% and 7% respectively while iron ore is up 25%.

AUD EXCHANGE RATES:

AUD/USD – 0.7215

AUD/GBP – 0.5509

AUD/EUR – 0.6291

AUD/NZD – 1.0466

AUD/JPY – 79.035

OTHER MARKETS:

All Ords (XAO) – 5,935

Gold – A$1,818/oz

Silver –  A$21.94/oz

WTI – US$55.48/barrel

DATA RELEASES TODAY:

China - Bank Holidays all week (no payments processed)

AUD - Building Approvals m/m & ANZ Job Advertisements m/m at 11.30am

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Topics: Market, Report

Market Update - 31st January 2019 - AUD & Equities Surge On Fed Slow Down

Posted by Patrick Downes on January 31, 2019 at 9:21 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

AUD Surges:

A double whammy of better than anticipated local CPI numbers and a more patient U.S Federal Reserve has helped the AUD surge higher against all the majors. AUD/USD moved back above 0.7200 and earlier this morning reached it's highest level since early December. The AUD also performed quite strongly vs. the Japanese Yen as risk aversion dissipated - both JPY and USD are both typically seen as risk aversion metrics rising when sentiment is poor and falling when sentiment is strong. Overall the past 24 hours have been good for the Aussie Dollar and equities for that matter with the Nasdaq moving 2.2% higher while the Dow surged a comfortable 1.77%. Our local index should open around 0.6% higher but may do even better through the session.

More Local Data: 

Import prices and Private Sector Credit are both due out this morning followed by Chinese manufacturing PMI around midday. Import prices will likely rise given the fall in the AUD, while private sector credit is expected to remain rather sluggish around 0.3% growth for the month. Commodities prices have been performing well lately, however we did see a slight pullback overnight in the price of iron ore following a pretty bullish run on the back of this second tragic Vale tailings dam failure.

AUD EXCHANGE RATES:

AUD/USD – 0.7216

AUD/GBP – 0.5503

AUD/EUR – 0.6281

AUD/NZD – 1.0475

AUD/JPY – 78.701

USD/BTC – $3,413

OTHER MARKETS:

All Ords (XAO) – 5,951

Gold – A$1,820/oz

Silver –  A$22.16/oz

WTI – US$54.29/barrel

DATA RELEASES TODAY:

AUD – Import Prices & Private Sector Credit at 11.30am

CNY - Manufacturing PMI at Midday

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Topics: Market, Report

Market Update - 30th January 2019 - Local CPI Due At 11.30AM, RBA Watching Closely

Posted by Patrick Downes on January 30, 2019 at 8:28 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

AUD Little Changed:

The AUD is little changed since yesterday but remains above 0.7100 vs. the Greenback and 0.6200 vs. the EURO, thanks to bullish iron ore prices and generally stronger commodities prices across the board. U.S stocks finished the overnight session mixed as the Dow Jones added 0.2%, while the Nasdaq and S&P closed lower; the tech heavy Nasdaq fell again as earnings misses escalated. The escalation in earnings misses for U.S corporate's along with sluggish growth and a persistent Trump-led trade war with China may prompt the U.S Federal Reserve to change it's tune on interest rates and stimulus when they meet again early tomorrow morning. As it stands U.S interest rates are at 2.5% having risen from 1.5% at the start of 2018.

Local CPI Numbers Out:

Local CPI otherwise known as the consumer price index is released this morning at 11.30am, with economists suggesting we'll see around 0.4% growth in the latest quarter which would be around the quarterly trend for the past 3 years. 0.4% CPI annualised is around 1.6%, which by the RBA's standards is lower than their target of 2-3%. Persistent low inflation or a lower than anticipated figure could be a dire outcome for the AUD and lead to projections of rate cuts from the RBA later this year, so definitely if you have payments to make today make these well before 11.30am.

AUD EXCHANGE RATES:

AUD/USD – 0.7119

AUD/GBP – 0.5438

AUD/EUR – 0.6222

AUD/NZD – 1.0438

AUD/JPY – 77.887

USD/BTC – $3,383

OTHER MARKETS:

All Ords (XAO) – 5,939

Gold – A$1,834/oz

Silver –  A$22.15/oz

WTI – US$53.25/barrel

DATA RELEASES TODAY:

AUD - Quarterly CPI at 11.30am

USD - Federal Funds Rate & FOMC Statement at 6.00am

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Topics: Market, Report

Market Update - 25th January 2019 - AUD Down Half A Percent Despite Strong Jobs Report

Posted by Patrick Downes on January 25, 2019 at 8:38 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

AUD Moves Lower:

The Aussie dollar is lower by 0.5%  despite another solid jobs report yesterday morning. The official unemployment rate dropped to 5.00% from 5.10% as 21,000 new jobs were created in December. Additionally, the November jobs number was revised higher from around 32,000 to 39,000 new jobs. Overall a very good jobs report but not enough to support the Aussie dollar which seems to be more tied to the ongoing China/U.S trade talks.

Equities & Commodities Perform Better:

Aussie equities finished yesterday's session higher and look set to open higher again this morning following positive sessions in both the U.S and Europe. Commodities prices, in particular iron ore and zinc have continued their good start to the year with Zinc seemingly breaking out of 2018's yearlong downtrend, while Iron Ore prices are near a three month high.

No economic data is due out tonight, however World Economic Forum meetings continue through this evening.

AUD EXCHANGE RATES:

AUD/USD – 0.7064

AUD/GBP – 0.5400

AUD/EUR – 0.6240

AUD/NZD – 1.0444

AUD/JPY – 77.425

USD/BTC – $3,549

OTHER MARKETS:

All Ords (XAO) – 5,930

Gold – A$1,806/oz

Silver –  A$21.60/oz

WTI – US$53.16/barrel

DATA RELEASES TODAY:

ALL - World Economic Forum meetings continue

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Topics: Market, Report

Market Update - 24th January 2019 - U.S Equities Grind Out Gains, AUD Mixed

Posted by Patrick Downes on January 24, 2019 at 8:38 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

Equities Edge Higher:

U.S equities eked out gains overnight despite starting the session strongly and appearing on the way to solid gains. Unfortunately though with markets still on egg shells those early gains weren't able to be held as news flow turned negative and debate continued about where the global economy is headed in 2019. European stocks fared a little worse finishing the session marginally lower with the U.K FTSE the worst performer down nearly 0.85%.

AUD Mixed In Overnight Trade: 

The Aussie Dollar's performance was mixed with the local currency up vs. the Euro, Greenback and Yen but down around half a percent vs. the Pound and Kiwi. Local employment data is due out this morning at 11.30am with the release likely to be watched closely for signs of weakness in the only bright spot of the economy. The unemployment rate has been dropping since early 2015, whilst jobs growth has been particularly strong over the past couple of years. In fact the strong employment numbers probably coincide with a more robust mining sector and generally stronger commodities prices since early 2016. Expectations are that we'll see around 17K new jobs created and a steady unemployment rate at 5.1%.

Ahead this evening is European interest rates which are set by the European Central Bank, otherwise known as the ECB. No change to their policy of zero percent interest rates are expected.

AUD EXCHANGE RATES:

AUD/USD – 0.7111

AUD/GBP – 0.5430

AUD/EUR – 0.6243

AUD/NZD – 1.0489

AUD/JPY – 77.968

USD/BTC – $3,514

OTHER MARKETS:

All Ords (XAO) – 5,908

Gold – A$1,796/oz

Silver –  A$21.50/oz

WTI – US$52.68/barrel

DATA RELEASES TODAY:

AUD - Employment Change at 11.30am

EUR - ECB Press Conference & Interest Rate Decision at 11.45pm

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Topics: Market, Report

Market Update - 23rd January 2019 - Positive Sentiment Turns Negative As Trade Tensions Reheat

Posted by Patrick Downes on January 23, 2019 at 8:26 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

Positive Turns Negative:

The positive sentiment which has dominated markets in the early part of the year appears to have slipped away overnight as China and the U.S again came to loggerheads over trade and IP. The negative risk sentiment saw a sell off in both equities and commodities including oil and copper while Gold not surprisingly surged. The AUD fared just as poorly and is down over half a percent right across the board.

World Economic Forum Kicks Off:

No economic data was released overnight, however the World Economic Forum in Davos, Switzerland kicked off overnight with impassioned speeches from a diverse range of speakers which included David Attenborough and NZ PM Jacinda Ardern. What comes of the WEF this year remains to be seen but it has too often become a gab fest with no real substance or follow through after the event ends.

AUD Complacency Is Dangerous: 

As mentioned above markets look decidedly more shaky today with volatility still wreaking havoc, those who took advantage of the AUD recently have done well, certainly you cannot become too complacent these days with forecasts from some Aussie economists for two rate cuts from the RBA this year. My personal opinion is two rate cuts are ridiculous and would only cause the AUD to crash and house prices to potentially start to run hot again. The economy while only slowly chugging along IS being supported by the lower AUD and therefore probably doesn't warrant any further rate cuts.

AUD EXCHANGE RATES:

AUD/USD – 0.7087

AUD/GBP – 0.5463

AUD/EUR – 0.6236

AUD/NZD – 1.0558

AUD/JPY – 77.579

USD/BTC – $3,572

OTHER MARKETS:

All Ords (XAO) – 5,924

Gold – A$1,804/oz

Silver –  A$21.53/oz

WTI – US$53.03/barrel

DATA RELEASES TODAY:

All - World Economic Forum in Davos

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Topics: Market, Report

Market Update - 22nd January 2019 - Chinese Economy 'Slowing'? Not Really, It's All In The Numbers

Posted by Patrick Downes on January 22, 2019 at 8:27 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

No report from me yesterday, however to quickly recap; not a great deal happened over the weekend or for that matter overnight. AUD/USD and AUD/EUR are the decliners down around half a percent since Friday morning, while AUD/GBP moved higher as continued Brexit shenanigans keep U.K traders on their toes. The AUD is unchanged vs. the Kiwi and Japanese Yen.

Equities and Commodities prices, namely metal prices continued to perform well through last week as signs U.S/China trade tensions are slowly dissolving, however growth headwinds within the Chinese economy persist and this was highlighted by yesterday's slowest pace of GDP growth since 2009.

But as they say 'it's all in the numbers', and percentages can deceive. GDP growth in China in 2009 was around 9% and GDP was at 5T USD, so in nominal terms China grew GDP by 500B USD in 2009. Today China's GDP stands at around 12.5T USD with GDP growth at 6.5%. Nominally that means China grew GDP by a little over 800B USD in the past 12 months. The bigger China's economy gets naturally the slower they'll grow. However consider China is a country of nearly 1.4b people, there is still decades of pent up demand within the economy.

AUD EXCHANGE RATES:

AUD/USD – 0.7128

AUD/GBP – 0.5521

AUD/EUR – 0.6265

AUD/NZD – 1.0606

AUD/JPY – 78.202

USD/BTC – $3,520

OTHER MARKETS:

All Ords (XAO) – 5,953

Gold – A$1,786/oz

Silver –  A$21.28/oz

WTI – US$54.20/barrel

DATA RELEASES TODAY:

USD - Bank Holiday - MLK Day

GBP - Average Earnings Index at 8.30pm

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Topics: Market, Report

Market Update - 18th January 2019 - Easing Trade Tensions See AUD, Metals & Commodities Rise

Posted by Patrick Downes on January 18, 2019 at 8:26 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

AUD Movements:

The only detractor overnight was AUD/GBP, with the other AUD crosses moving higher in unison with U.S stocks and metals prices. AUD/USD and AUD/JPY surged around half a percent, while AUD/EUR and AUD/NZD were up a little less, at 0.3%. U.S stocks along with Zinc and Iron ore both gained as a new report suggested Trump insiders were pushing hard for a resolution to trade tensions with China which have persisted for nearly one year. U.S stocks were up on average 0.7% at the close.

2nd Brexit Referendum Discussed:

The Pound rose overnight as deliberations in Parliament suggested a second referendum could be on the cards and held within a year. With all the toing and froing and change of hard of many past Brexit voters it would seem that any second vote would result in a no Brexit conclusion and a return to some normalcy for the U.K after two and a half years in the wilderness. If you're a budding currency trader a long GBP trade could be quite a good trade during 2019.

U.K retail sales data is out tonight, while Day 2 of G20 meetings continue.

AUD EXCHANGE RATES:

AUD/USD – 0.7160

AUD/GBP – 0.5505

AUD/EUR – 0.6281

AUD/NZD – 1.0603

AUD/JPY – 78.205

USD/BTC – $3,617

OTHER MARKETS:

All Ords (XAO) – 5,909

Gold – A$1,797/oz

Silver –  A$21.59/oz

WTI – US$52.48/barrel

DATA RELEASES TODAY:

All - G20 Meetings

GBP - Retail Sales at 8.30pm

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Topics: Market, Report

Market Update - 17th January 2019 - Metals, Energy Prices & Equities Move Higher, AUD/USD Retreats 0.5%

Posted by Patrick Downes on January 17, 2019 at 9:04 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

Despite a solid session overnight in which both metals & energy prices and overseas equities moved higher, the AUD starts the day around half a percent lower (than this time yesterday) vs. the Greenback and Pound and around a third of a percent lower vs. the Euro. Metals were led higher higher by copper and zinc, while the Dow was the best performing major index overnight, finishing up around 0.6%.

Brexit Latest: 

In the U.K Theresa May survived a no confidence vote which means U.K parliament will head back into cross-bench Brexit talks in a bid to come up with a deal that will satisfy both U.K politicians and their European counterparts. This story keeps twisting and turning and so its prudent to expect increased volatility in all the GBP crosses including AUD/GBP. As a rough guide AUD/GBP has traded between 0.5450 and 0.5680 just this month, expect more of the same until a definite conclusion to this saga transpires.

G20 Rumblings: 

G20 meetings happening in Tokyo today - these meetings can provide positive news but it's all about substance rather than quantity. Perhaps G20 nations will discuss some coordinated effort to reinvigorate global growth? Watch this space.

AUD EXCHANGE RATES:

AUD/USD – 0.7133

AUD/GBP – 0.5534

AUD/EUR – 0.6261

AUD/NZD – 1.0544

AUD/JPY – 77.936

USD/BTC – $3,578

OTHER MARKETS:

All Ords (XAO) – 5,893

Gold – A$1,804/oz

Silver –  A$21.75/oz

WTI – US$52.61/barrel

DATA RELEASES TODAY:

All - G20 Meetings

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Topics: Market, Report

Market Update - 16th January 2019 - AUD Stable & Brexit No Deal Vote Could See Fresh Referendum

Posted by Patrick Downes on January 16, 2019 at 8:45 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

Brexit No Deal:

The U.K Parliament last night voted against the Brexit deal brokered by Theresa May and Europe which could trigger new national elections and a fresh Brexit referendum within the next few weeks. AUD/GBP surprisingly is little changed this morning with the market perhaps seeing the failed vote as a new opportunity for the U.K to remain a part of Europe and avoid the potential pitfalls and headwinds of a life not conjoined to Europe's hip.

Other News: 

U.S and European equities moved higher overnight managing to add as much as 1.71% on the NASDAQ in the U.S and nearly 0.6% on the London FTSE following the no deal Brexit vote. AUD/USD is little changed like AUD/GBP however AUD/EUR has rallied around half a percent overnight. U.S PPI aka the producer prices index failed to meet expectations as producer prices fell by -0.2% during December. The decline in U.S producer prices was the sharpest in two and a half years and perhaps stems from the ongoing trade dispute with China and lower oil prices with WTI prices down around 20% during December.

In the U.K we will hear from Bank of England Governor Carney - no doubt there will be comments about the recent no deal Brexit vote and any support the Bank of England will provide.

AUD EXCHANGE RATES:

AUD/USD – 0.7170

AUD/GBP – 0.5561

AUD/EUR – 0.6280

AUD/NZD – 1.0530

AUD/JPY – 78.001

USD/BTC – $3,547

OTHER MARKETS:

All Ords (XAO) – 5,871

Gold – A$1,790/oz

Silver –  A$21.64/oz

WTI – US$50.93/barrel

DATA RELEASES TODAY:

EUR – BOE Gov Carney Speaks at 8.15pm

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Topics: Market, Report

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