Compass Global Markets' Blog

Market Update - 1st December 2017 - AUD Retreats On Weaker Commodities Prices

Posted by Patrick Downes on December 1, 2017 at 8:44 AM

Mixed results for equities overnight with U.S equities making solid gains while European equities lost ground amid slower growth. Overall however Europe's prospects have been improving and we've seen that in the AUD/EUR rate which has been in decline since late-February - AUD/EUR this year is down around 1000 points or 10 cents from 0.7320 to 0.6350 today.

Data released tonight includes both UK and US manufacturing PMI with early predictions suggesting pretty flat results. As such it's probably likely to be a quiet day for markets and the Aussie dollar.

AUD EXCHANGE RATES:

AUD/USD – 0.7565

AUD/GBP – 0.5591

AUD/EUR – 0.6352

AUD/NZD – 1.1068

AUD/JPY – 85.164

COMMODITIES: 

Gold – A$1685/oz

Silver –  A$21.74/oz

WTI – US$57.34/barrel

DATA RELEASES TODAY:

GBP - Manufacturing PMI at 8.30pm

USD - ISM Manufacturing PMI at 2.00am

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Topics: Report, Market

Market Update - 30th November 2017 - AUD/USD Falls Back Below 0.7600, While AUD/GBP Falls On Positive Brexit Talks

Posted by Patrick Downes on November 30, 2017 at 10:02 AM

The Aussie dollar has continued to track pretty closely to the 0.76 figure vs. the USD with brief moves both above and below over the past fortnight, which tends to suggest that it's building in some solid resistance and support levels around the figure. What that would mean is we'd need a pretty strong catalyst to break out of the range and that could be something like a rate hike in the U.S, solid jobs numbers or something along those lines. Today's building approvals and new home sales figures are unlikely to be such a catalyst. In the U.K it appears Brexit talks are moving forward and closer to a resolution which helped support the Pound and saw AUD/GBP head lower and hold below 0.5700. For those waiting on the sidelines for prospects to improve with respect to AUD/GBP you could be in for a long wait and I'd suggest looking at hedging a portion of your GBP exposures would be prudent.

The flavour of the year Bitcoin or BTC pushed through US$10,000 yesterday afternoon before swiftly entering bear market territory with a 20% correction from a high of US$11,384. It's now trading about US$10,113 and it has been suggested this could be one of the greatest bubbles in human history...my advice...don't be the last person standing with no seat.

In other news iron ore prices have again been moving higher which is supporting the Aussie dollar, but iron ore prices remain exceptionally volatile having whipsawed between $95 and $53 bucks a tonne just this year. Ahead today is local Aussie date in New Home Sales figures and Building Approvals which is closely followed by Chinese economic data around lunchtime AEST. Strong numbers here could further support iron ore and perhaps see it testing $70 a tonne this week.

AUD EXCHANGE RATES:

AUD/USD – 0.7573

AUD/GBP – 0.5645

AUD/EUR – 0.6389

AUD/NZD – 1.0996

AUD/JPY – 84.764

COMMODITIES: 

Gold – A$1695/oz

Silver –  A$21.84/oz

WTI – US$57.40/barrel

DATA RELEASES TODAY:

AUD - HIA New Home Sales at 11.00am

AUD - Building Approvals at 11.30am

CNY - Manufacturing & Non-Manufacturing PMI at midday (AEST)

EUR - CPI Flash Estimate at 9.00pm

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Topics: Report, Market

CGM Weekly FX Video Update - 28th November 2017

Posted by Thomas Su on November 28, 2017 at 11:56 AM

 

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Market Update - 28th November 2017 - BTC Heading Towards US$10,000, AUD/USD Holding Onto 0.7600

Posted by Patrick Downes on November 28, 2017 at 10:06 AM

Is Bitcoin the future of international payments? Maybe not.

But how about crypto-currencies in general and the block-chain? Yes, very likely.

Where am I going with this? Well, whilst I do believe there is a future for crypto-currencies and the block-chain in delivering international payments, I'm suggesting caution to those wishing to invest their life savings in BTC at this stage in the market. Why? Because if it looks like a bubble, smells like a bubble and acts like a bubble, it probably is a bubble. And with so much of the trade in BTC speculative people are quite simply not using BTC for anything other than a tool for speculation on future price growth.

Anyway, to the Aussie dollar and we are just clinging onto 0.7600 this morning after a quiet session yesterday and flat results overnight for both commodities and equities. Iron ore futures are holding up however with prices for our major export near three month highs.

No data is released tonight, however a speech from Bank of England Governor Carney could be a market move for the Pound and therefore relevant to those with AUD/GBP exposures.

AUD EXCHANGE RATES:

AUD/USD – 0.7601

AUD/GBP – 0.5706

AUD/EUR – 0.6388

AUD/NZD – 1.0984

AUD/JPY – 84.425

COMMODITIES: 

Gold – A$1702/oz

Silver –  A$22.43/oz

WTI – US$57.83/barrel

DATA RELEASES TODAY:

GBP - BOE Gov. Carney Speaks at 6.30pm

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Topics: Report, Market

Market Update - 24th November 2017 - AUD Tracks Back Above 0.7600 On RBA Comments

Posted by Patrick Downes on November 24, 2017 at 8:21 AM

We're higher today than when my last report went out on Wednesday morning, with AUD tracking back above 0.7600 vs. the USD on comments from RBA Gov. Lowe who suggested the next move in local interest rates would likely be up rather down, however in further comments he suggested that that likely move higher was probably still a fair way off given the magnitude of housing debt, slow wages growth and lingering poor retail sales figures.

In other news Bloomberg.com has headlined there website today with the rather gloomy title "The Party Is Over for Australia's $5.6 Trillion Housing Frenzy" - following slowing price growth in both Sydney and Melbourne. And while the headline appears overly gloomy it doesn't suggest a severe correction in prices is coming back rather just a period of softer growth and perhaps caution with respect to investments in property.

Other than that I hope you'll all have a great weekend and I'll be speaking with most of you over the next month to thank you for your continued business and hopefully gain some insights on what I and Compass can do better in 2018!

AUD EXCHANGE RATES:

AUD/USD – 0.7626

AUD/GBP – 0.5729

AUD/EUR – 0.6434

AUD/NZD – 1.1062

AUD/JPY – 84.814

COMMODITIES: 

Gold – A$1692/oz

Silver –  A$22.40/oz

WTI – US$58.52/barrel

DATA RELEASES TODAY:

No data out today or over the weekend

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Topics: Report, Market

Market Update - 22nd November 2017 - AUD Surges Higher With Iron Ore Prices

Posted by Patrick Downes on November 22, 2017 at 8:36 AM

The Aussie dollar launched higher overnight on the back of a surge in iron ore prices to the highest levels since mid-September. Helping the Aussie dollars cause further was generally bullish markets for both equities and commodities more or less across the board. The Aussie dollar to this day remains a risk asset and when optimism is sky high the AUD tends to perform well and when we have destabilising macro events we tend to see a sell-off in the AUD.

RBA monetary policy minutes yesterday didn't really tell us anything new nor did speeches from RBA Ass. Gov Bullock and Gov Lowe with the latter merely again discussing things like what is a new normal for our economy and the fact that while employment growth has increased, consumption growth forecasts remain weak. I.e. potentially lower interest rates for longer.

Ahead today is the MI Leading Index and Construction Work Done data, the MI Leading Index is a composite of 9 economic indicators and generally speaking a positive number is seen as good for the economy and good for the Aussie - the index has been more or less flat or negative since late 2013. Construction Work Done is another interesting gauge as it looks at the amount of construction activity going on. It's no surprise we've had a record construction boom of late, however recent figures suggest that is certainly slowing - the market is expecting to see a further slowing in the vicinity of -2.1% for the latest quarter.

AUD EXCHANGE RATES:

AUD/USD – 0.7578

AUD/GBP – 0.5723

AUD/EUR – 0.6455

AUD/NZD – 1.1095

AUD/JPY – 85.221

COMMODITIES: 

Gold – A$1689/oz

Silver –  A$22.38/oz

WTI – US$56.89/barrel

DATA RELEASES TODAY:

AUD – MI Leading Index at 10.30am

AUD - Construction Work Done at 11.30am

USD - Core Durable Goods Orders at 12.30am

USD - FOMC Minutes at 6.00am (tomorrow morning)

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Topics: Report, Market

CGM Weekly FX Video Update - 21st November 2017

Posted by Thomas Su on November 21, 2017 at 1:30 PM

 

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Market Update - 21st November 2017 - AUD/USD Could Be Headed Lower If 1999-2000 Is Any Indication

Posted by Patrick Downes on November 21, 2017 at 8:31 AM

Stocks and commodities rallied overnight led by the U.S Dow Jones Index and Iron ore prices respectively, however the bullish sentiment here didn’t support the Aussie dollar with AUD/USD falling again, this time testing 0.7543 (about where we are at the time of writing).

As I mentioned in yesterday’s report I asked for anyone who recalls a period when U.S interest rates went above Aussie interest rates and none other than our chief strategist Tony Boyadjian out of our Sydney office was good enough to get back to me – “Last time Aussie rates fell below US rates was between June 1999 & Dec 2000. A$ fell from 66US to 48US.” Now while history doesn’t repeat it certainly does rhyme and so it may be worthwhile for importers to look at incorporating some form of hedging into their FX requirements. This is an area I can help clients with and an area the banks tend to be reluctant to help SMEs given the costs associated for the bank. We don’t have those same costs so hedging is actually quite an affordable option for SMEs looking to protect their downside risks.  And again I want to reiterate I’m not suggesting AUD/USD is heading towards 0.4800 however we may see a correction to the downside should the U.S Federal Reserve hike interest rates four times in 2018.

Ahead today we have RBA Monetary Policy minutes followed by speeches from the RBA Ass. Governor and Governor himself Philip Lowe. As such probably expect a little more volatility than normal today.

AUD EXCHANGE RATES:

AUD/USD – 0.7543

AUD/GBP – 0.5703

AUD/EUR – 0.6433

AUD/NZD – 1.1087

AUD/JPY – 84.979

COMMODITIES: 

Gold – A$1693/oz

Silver –  A$22.44/oz

WTI – US$56.37/barrel

DATA RELEASES TODAY:

AUD – Monetary Policy Minutes at 11.30am

AUD – RBA Ass. Gov Bullock Speaks at 2.50pm

AUD – RBA Gov. Lowe Speaks at 8.05pm

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Topics: Report, Market

Market Update - 20th November 2017 - Commodities Tread Water, While Equities & The AUD Fall

Posted by Patrick Downes on November 20, 2017 at 8:32 AM

The Aussie dollar declined again over the weekend pushing the Aussie closer to 0.63 vs. the EURO and 0.56 vs. the Pound and further falls may be forthcoming over the next year particularity against the Greenback with a recent report out of Goldman Sachs suggesting the U.S Federal Reserve may raise rates as many as four times in 2018. Should they do this we will likely be in the unusual situation of the U.S having higher interest rates than here in Australia, and I don't recall that ever happening in my lifetime, however if someone can recall a period where this did occur I'd certainly appreciate the info.

In addition to the declines in the Aussie dollar over the weekend, we also saw falls in U.S and European equities while commodities tread water in the absence of economic data out of China.

No economic data out today, however we should see another speech from ECB President Mario Draghi which could have an impact on AUD/EUR which has been in decline for quite some time.

AUD EXCHANGE RATES:

AUD/USD – 0.7563

AUD/GBP – 0.5721

AUD/EUR – 0.6414

AUD/NZD – 1.1093

AUD/JPY – 84.763

COMMODITIES: 

Gold – A$1710/oz

Silver –  A$22.87/oz

WTI – US$56.78/barrel

DATA RELEASES TODAY:

No data

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Topics: Report, Market

Market Update - 17th November 2017 - A Drop In Unemployment Rate And Higher Commodity Prices Boost AUD

Posted by Patrick Downes on November 17, 2017 at 9:40 AM

A mixed result for local employment data and a rebound in commodities & equities has halted the Aussie dollars decline for now. AUD/USD which had looked like it was potentially going to test the low 0.75's or even 0.74 was supported by a surprise drop in the unemployment rate to 5.4%. However the key thing here is that while more and more people are finding jobs in both Australia and the U.S wages have been more or less stagnant for a decade and asset prices (predominantly housing here and stocks in the U.S) have skyrocketed as a result of low interest rates. With respect to Australia one of either two things must happen, wages increase to reflect the increase in housing prices or house prices decline to a more sustainable level to allow those with a modest salary the ability to purchase property and a roof over their head.

Ahead tonight is a speech from Mario Draghi and the market will be looking for signs on when the first of perhaps many rate hikes will occur. The European economy has been picking up steam so it's probably more a 'when' do rates rise rather than 'if'. AUD/EUR has been reflecting this expectation and has been in a free fall since about Feb and there is probably more to come, those with EURO exposures can certainly book Forwards to hedge any further downside risks.

AUD EXCHANGE RATES:

AUD/USD – 0.7588

AUD/GBP – 0.5750

AUD/EUR – 0.6447

AUD/NZD – 1.1079

AUD/JPY – 85.784

COMMODITIES: 

Gold – A$1684/oz

Silver –  A$22.51/oz

WTI – US$55.35/barrel

DATA RELEASES TODAY:

EUR - ECB President Draghi Speaks at 7.30pm

USD - Building Permits at 12.30am

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Topics: Report, Market

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