Compass Global Markets' Blog

Market Update - 31st August 2018 - AUD, Commodities & Equities Take A Hit As More China Tariffs Loom

Posted by Patrick Downes on August 31, 2018 at 8:21 AM

The AUD has taken another dip overnight as geopolitical concerns caused widespread selloffs across commodities, stocks and risk assets more broadly. Specifically, it appears as though Trump is planning to go ahead with US$200 billion in tariffs on Chinese imports as early as next week, which is more than likely to see China retaliate with in kind tariffs. Trade war escalation helps no one and as a result U.S & European equities finished lower with the DOW and German DAX taking the biggest hits down around half a percent in overnight trade. The AUD is lower by around half a percent as fears the Trump Tariffs will impact Chinese growth.

So what can I say in relation to all of this and the AUD?

Well, first of all markets typically over-react on fears and it's not really surprising to see a commodities/AUD sell off overnight following news of more tariffs - we've been here before. However global growth is still happening around the world including in China - our largest trading partner. Additionally our commodities, iron ore, copper and more recently lithium will continue to be sold to China as they develop their infrastructure, electric vehicles market and build the bridges, rail lines, ports and highways that make up the One Belt, One Road gigantic infrastructure project. All of this is supportive of the AUD in the long term. I'll leave at that, have a great weekend!

AUD EXCHANGE RATES:

AUD/USD – 0.7235

AUD/GBP – 0.5552

AUD/EUR – 0.6197

AUD/NZD – 1.0881

AUD/JPY – 80.461

USD/BTC – $6,924

OTHER MARKETS: 

All Ords (XAO) – 6,460

Gold – A$1,651/oz

Silver –  A$20.02/oz

WTI – US$69.87/barrel

DATA RELEASES TODAY:

No economic data today.

Read More

Topics: Report, Market

Market Update - 29th August 2018 - AUD Holding Around 0.7300, Metals Prices On A Role

Posted by Patrick Downes on August 29, 2018 at 9:11 AM

The Aussie Dollar vs. the majors is little changed since the start of the week and essentially treading water in a light week for news. Trump appears to be more willing to negotiate on trade following what appears to be a deal with Mexico however details are few and far between, while talks with China and the EU continue. Overall things appear relatively calm and stable at this time but going by the activity over the past year or so, it's unlikely to stay this way.

U.S & European equities finished the session mixed overnight with stock market futures suggesting the ASX 200 will open marginally lower. Base metal prices lead by Zinc, Copper and Nickel broke higher overnight, cutting through resistance and potentially setting up a rally back to levels seen in June, however this is still playing out but early signs of deescalation in trade wars, a more dovish (on interest rates) U.S Federal Reserve is certainly supportive of global growth and by default metals prices. This should support the AUD and local mining stocks today and perhaps through the week.

HIA New Home Sales data out this morning and while HIA don't provide an exact release time or forecast of what to expect safe to say housing trends have been pretty poor of late and it's probably likely to stay that way or get worse as interest rates edge higher and credit growth contracts. Shouldn't have too much of an impact on the Aussie Dollar. U.S GDP later this evening will though, so keep an eye out for some movements overnight.

AUD EXCHANGE RATES:

AUD/USD – 0.7306

AUD/GBP – 0.5669

AUD/EUR – 0.6242

AUD/NZD – 1.0903

AUD/JPY – 81.265

USD/BTC – $7,043

OTHER MARKETS: 

All Ords (XAO) – 6,413

Gold – A$1,637/oz

Silver –  A$20.08/oz

WTI – US$68.46/barrel

DATA RELEASES TODAY:

AUD - HIA New Home Sales m/m

USD - Prelim GDP q/q at 10.30pm

Read More

Topics: Report, Market

Market Update - 27th August 2018 - A New Prime Minister But Same Old Aussie Dollar

Posted by Patrick Downes on August 27, 2018 at 8:38 AM

For those of you who didn't read or view the news over the weekend - we now have a new Prime Minister. That's right, Malcolm Turnbull is out and Scott Morrison is in and whether you like him or not he's here until at least the next election - which probably won't be until early next year.

What has the leadership struggle within the Liberal Party of Australia done for the Aussie? Very little is the simple answer. AUD/USD started last week around 0.7300 and despite the leadership spills, and all the associated turmoil AUD/USD finished the week more or less in the same position just above the 0.7300 level.

Aussie equities are set to open higher this morning thanks to a strong finish in the U.S and Europe on Friday evening, while commodities markets, specifically metals prices performed very well with Copper back above US$6,000 a tonne. Copper is seen as the bellwether off metals prices and when it performs so too does other metals and by default the AUD.

No economic data is out today.

AUD EXCHANGE RATES:

AUD/USD – 0.7301

AUD/GBP – 0.5673

AUD/EUR – 0.6275

AUD/NZD – 1.0911

AUD/JPY – 81.278

USD/BTC – $6,641

OTHER MARKETS: 

All Ords (XAO) – 6,357

Gold – A$1,646/oz

Silver –  A$20.26/oz

WTI – US$68.53/barrel

DATA RELEASES TODAY:

None

Read More

Topics: Report, Market

Market Update - 24th August 2018 - Leadership Spill At Noon Today May Provide A Relief Rally For AUD

Posted by Patrick Downes on August 24, 2018 at 8:32 AM

Peter Dutton, Scott Morrison and Julie Bishop. One of these individuals could be the next Prime Minister of Australia at around 12.30pm this afternoon. Alternatively, stalwart Malcolm Turnbull may survive the challenge and remain as PM, which would mean a National election could be called reasonably soon. The Aussie Dollar certainly didn't take the leadership turmoil in it's stride nor the continuing impasse between Trump/China on trade, with the AUD pummelled to the tune of about 1% vs. the majors while our stock market also closed in the red.

A better day could be on the cards today should we see some stability and finality regarding the leadership of the Liberal Party, however as with all things related to politics maybe don't hold your breath. The ASX is expected to open higher this morning despite European and U.S equities finishing lower. Weaker metals prices also aren't aiding the Aussie Dollar - with Copper leading metals prices broadly lower.

U.S Core Durable Goods orders released tonight along with a speech from Federal Reserve Chair Jerome Powell. There has been some contention recently about the rate and speed of any further interest rate hikes in the U.S, so this will certainly be watched closely for any indication on the Feds next move. AUD/USD will perform well if we see the fed ratchet back the pace of interest rate hikes.

AUD EXCHANGE RATES:

AUD/USD – 0.7211

AUD/GBP – 0.5637

AUD/EUR – 0.6249

AUD/NZD – 1.0901

AUD/JPY – 80.39

USD/BTC – $6,509

OTHER MARKETS: 

All Ords (XAO) – 6,360

Gold – A$1,635/oz

Silver –  A$20.02/oz

WTI – US$67.82/barrel

DATA RELEASES TODAY:

USD - Core Durable Goods Orders m/m at 10.30pm

USD - Fed Chair Powell Speaks at midnight

Read More

Topics: Report, Market

Market Update - 22nd August 2018 - USD Index Extends Losses, Supporting Commodities Prices & The AUD

Posted by Patrick Downes on August 22, 2018 at 10:00 AM

The AUD continued it's slow grind higher overnight thanks to stronger metals prices and a weaker U.S Dollar. The Dollar Index (a trade weighted average of the USD vs. a basket of currencies) has now fallen for five of the past six trading days after rallying to a high of 96.60. The Dollar strength began around Feb/March coinciding with Trump's trade war with China, the EU and Canada and is probably the main reason why we've seen so much weakness in metals prices and the Aussie dollar. If we see a reversal in USD fortunes we would expect to see stronger metals prices and a stronger AUD and we could see yet further gains if the U.S Federal Reserves tapers it's interest rate hikes later in the year as some are now speculating could be the case. Previously the market was expecting the U.S Federal Reserve to continue to raise rates over the foreseeable future.

All stock markets in the U.S and Europe bar the London FTSE moved higher but the strong showing in equities markets and for commodities prices overnight isn't expected to support the ASX - which looks likely to open about half a percent lower this morning.

We have some local data out this morning in Construction work while we'll also hear from RBA Assistant Governor Debelle around 1pm this arvo. The FOMC also delivers it's meeting minutes tomorrow morning.

AUD EXCHANGE RATES:

AUD/USD – 0.7326

AUD/GBP – 0.5680

AUD/EUR – 0.6337

AUD/NZD – 1.0965

AUD/JPY – 80.79

USD/BTC – $6,456

OTHER MARKETS: 

All Ords (XAO) – 6,383

Gold – A$1,625/oz

Silver –  A$20.08/oz

WTI – US$66.00/barrel

DATA RELEASES TODAY:

Construction Work Done q/q at 11.30am

RBA Assist Gov Debelle Speaks at 1.10pm

FOMC Meeting Minutes at 4.00am (tomorrow morning)

Read More

Topics: Report, Market

Market Update - 20th August 2018 - AUD Makes Gains As Markets Settle

Posted by Patrick Downes on August 20, 2018 at 8:28 AM

I haven't posted a Morning Market Update since Thursday, however the good news for the vast majority of you importers is that the Aussie Dollar has finally found a bit of support around the 0.7200 level - the official low was 0.7202 and we've since bounced back to be trading just under 0.7300 as I write this report. Commodities and Equities also look better with Trump in fresh talks with China about settling the current trade dispute and things settling on the global macro economic front. We would hope to see further AUD gains over the course of the week...however in the FX market nothing is certain so the best thing is to remain vigilant and hedge your foreign currency exposures where appropriate. If you need to discuss how to reduce risk with a falling AUD please contact me.

No economic data is released today and not much locally through the week. U.S Federal Reserve Bank minutes will be released Thursday morning which should give us some further insights into the next rate move from the U.S Fed, however it's likely to be higher interest rates for the foreseeable future.

AUD EXCHANGE RATES:

AUD/USD – 0.7293

AUD/GBP – 0.5716

AUD/EUR – 0.6373

AUD/NZD – 1.1002

AUD/JPY – 80.629

USD/BTC – $6,483

OTHER MARKETS: 

All Ords (XAO) – 6,426

Gold – A$1,618/oz

Silver –  A$20.19/oz

WTI – US$65.14/barrel

DATA RELEASES TODAY:

No data.

Read More

Topics: Report, Market

Market Update - 16th August 2018 - AUD Remains On Back-foot As Commodities & Stocks Take A Pummelling

Posted by Patrick Downes on August 16, 2018 at 9:05 AM

Turkish contagion fears roiled markets again overnight with commodities and stocks the biggest losers. Zinc used to galvanise steel took the brunt of the losses falling a mind bending 6.6% overnight while Copper the second most used metal after Iron lost 4% in manic trade and increased fears that the global economy may unravel years of good work. U.S and European stocks fell as much as 1.8%, while Asian indicies fared worse yesterday with the Shenzhen 300 down 2.5%.

The Aussie dollar and commodities have not fared well against a resurgent USD and is now loitering in the low 0.72's with fears a break below 0.7200 could see us test December 2016 lows around 0.7160 on the wholesale market. If we failed to hold 0.7160 the next level of support would be 0.6828 reached in Jan 2016 at the depths of the commodities bear market.

Ahead today is employment data at 11.30am; the market is expecting no change in the unemployment rate from 5.4% however about 15K new jobs are anticipated to have been created during July.

AUD EXCHANGE RATES:

AUD/USD – 0.7219

AUD/GBP – 0.5680

AUD/EUR – 0.6359

AUD/NZD – 1.1009

AUD/JPY – 79.918

USD/BTC – $6,344

OTHER MARKETS: 

All Ords (XAO) – 6,415

Gold – A$1,624/oz

Silver –  A$19.98/oz

WTI – US$64.36/barrel

DATA RELEASES TODAY:

AUD – Employment Change & Unemployment Rate at 11.30am

Read More

Topics: Report, Market

Market Update - 14th August 2018 - Markets Still Roiling As A Result Of Trump's Turkey Slap

Posted by Patrick Downes on August 14, 2018 at 8:38 AM

No economic data was released yesterday or overnight which means markets turned to global macro news for their cues. As a result, Turkey and its slip towards default led markets and led them quite substantially lower. With their proximity to Turkey and given Turkey is a reasonably sized economic power in the region European equities lost as much as 0.75% - with Spain the worst performer and the DAX losing about half a percent. U.S stocks and commodities didn't fare much better with the DOW down 0.5% while commodities prices copped a further beating - Zinc, Copper and Lead all continued to move lower amid risk aversion.

The Aussie dollar hasn't avoided the markets wrath down a whopping two cents in a little over two trading days but is conceivably looking a little over sold at current levels. I'm generally optimist when it comes to these kind of things and with global growth and inflation still growing - I'd like to think this is simply a short term aberration and commodities, the Aussie and equities will continue to perform quite well into the near future once we get past all the trade wars, tariffs and sanctions which Trump dishes out like he's the matre d at a soup kitchen.

NAB Business Confidence is at 11.30am followed by Chinese data around lunch time which should give us some colour on the health of the Chinese economy.

AUD EXCHANGE RATES:

AUD/USD – 0.7252

AUD/GBP – 0.5676

AUD/EUR – 0.6355

AUD/NZD – 1.1035

AUD/JPY – 80.311

USD/BTC – $6,221

OTHER MARKETS: 

All Ords (XAO) – 6,341

Gold – A$1,641/oz

Silver –  A$20.62/oz

WTI – US$66.81/barrel

DATA RELEASES TODAY:

AUD - NAB Business Confidence at 11.30am

CNY - Retail Sales & Industrial Production at midday

GBP - Average Earnings Index 3m/y at 6.30pm

Read More

Topics: Report, Market

Market Update - 13th August 2018 - AUD Heads Lower As Trump Crushes The Turkish Lira & Equities

Posted by Patrick Downes on August 13, 2018 at 8:47 AM

Donald Trump caused more turmoil in markets late last week when he slapped/forecast further tariffs on both China and Turkey. The tariffs on some Turkish imports caused the Turkish Lira to go into a meltdown losing as much as 25% which bred a level of contagion fear which has seen the Aussie dollar and other currencies pummelled along with both U.S and European equities. In summary markets are a see of red this morning, with the only beneficiary being Gold which is up around 1% and foreign travellers picking up substantial bargains in Turkey.

AUD/USD in the mid-0.72's is the lowest level we've been since Jan 2017 and for our export clients presents one hell of an opportunity to convert your surplus USD back into AUD. More broadly and commenting on current levels, my personal opinion would be that this is a short term aberration which at the moment benefits exporters but as the majority of you are importers I wouldn't be too concerned - keep an eye out for the inevitable bounce.

No economic data is released today however a bit of economic data out later in the week in employment change on Thursday.

AUD EXCHANGE RATES:

AUD/USD – 0.7258

AUD/GBP – 0.5684

AUD/EUR – 0.6373

AUD/NZD – 1.1048

AUD/JPY – 80.301

USD/BTC – $6,316

OTHER MARKETS: 

All Ords (XAO) – 6,366

Gold – A$1,663/oz

Silver –  A$21.03/oz

WTI – US$67.03/barrel

DATA RELEASES TODAY:

No economic data today

Read More

Topics: Report, Market

Market Update - 8th August 2018 - RBA Maintains Rates At 1.5%, But Inflation Is Coming In 2019-2020

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

A weaker US dollar, stronger commodities markets and a positive finish for European and U.S equities has helped the Aussie move higher against most of the majors and back above 0.7400 vs. the Greenback. The U.S Dollar Index came off around 20-30 points, while commodities and equities moved higher - commodities were well supported by higher prices for base metals Zinc, Copper and Nickel.

The RBA kept rates on hold yesterday at 1.5% while noting that GDP is expected to average a bit above 3% during 2018 and 2019. The concerns though remain the housing market and over indebtedness as a whole - "one continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high." On the plus side the RBA noted that business conditions were generally positive in both non-mining industries and the resource sector which has continued to rebound. Overall inflation is likely to come in at a little under 2% but the RBA expected this number to grow through 2019 and 2020 - I would suggest the next rate hike will likely take place sometime in 2019 which at the time should be bullish for the Aussie dollar. In the interim expect more of the same and for AUD/USD to start with a 7 in the front of it.

AUD EXCHANGE RATES:

AUD/USD – 0.7402

AUD/GBP – 0.5711

AUD/EUR – 0.6374

AUD/NZD – 1.1013

AUD/JPY – 82.43

USD/BTC – $6,718

OTHER MARKETS: 

All Ords (XAO) – 6,340

Gold – A$1,631/oz

Silver –  A$20.71/oz

WTI – US$68.57/barrel

DATA RELEASES TODAY:

AUD – Home Loans m/m at 11.30am

AUD - RBA Governor Lowe Speaks at 1.05pm

Read More

Topics: Report, Market

Compass Global Markets' Blog

Subscribe to Email Updates

Recent Posts