Compass Global Markets' Blog

Market Update - 22nd February 2019 - AUD Slips Through The Week But Jobs Numbers Still Strong

Posted by Patrick Downes on February 22, 2019 at 9:39 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.

Due to travel and work commitments my market reports have been few and far between this week. Apologies about that if you rely on my morning email for your daily FX update.

AUD Slips, Brexit Extension:

The AUD will start the final day of the week around half a percent lower vs. the Greenback and Euro, while the Pound has climbed against the Aussie Dollar as Theresa May is expected to request a three month extension/delay of Brexit. Locally, employment data was released yesterday and showed continued strong employment numbers and an unemployment rate anchored at 5%. Unfortunately though, wages growth remains stagnant for the middle class which continues to drag on the economy and it appears more and more economists are becoming bearish on the Aussie economies prospects to turn things around without the RBA's helping hand via a number of interest rate cuts. Should they proceed with this course of the action then all the AUD/USD forecasts for 0.65 may well come to fruition. Now is certainly a good time to consider hedging your USD exposures, even if you've never done so before.

No Data Out Today:

No economic data is due out today and U.S equities fell by around 0.4% last night. Local stocks are set to open flat this morning.

AUD EXCHANGE RATES:

AUD/USD – 0.7061

AUD/GBP – 0.5407

AUD/EUR – 0.6226

AUD/NZD – 1.0390

AUD/JPY – 78.111

OTHER MARKETS:

All Ords (XAO) – 6,214

Gold – A$1,866/oz

Silver –  A$22.29/oz

WTI – US$56.88/barrel

DATA RELEASES TODAY:

No economic data

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Topics: Market, Report

Market Update - 19th February 2019 - AUD/USD Moves Higher On Positive Sentiment

Posted by Patrick Downes on February 19, 2019 at 10:17 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/USD Lift:

We've had a nice little uplift in AUD/USD since my last report on Thursday or Friday with a spike above 0.7150 thrown in yesterday, right now we aren't too far off the 0.7100 figure. But murmuring's from bank economists and other places suggest the Aussie Dollar at current level's is an opportunity for importers as opposed to a sign of things to come, with the bias for AUD/USD definitely to the downside. Some forecasts are as low as 0.6500.

RBA Minutes Due: 

The other AUD crosses are also a bit higher than last week, but not by as much. Local Monetary Policy Minutes from the RBAs latest meeting are due out this morning at 11.30am.

In other news, U.S stocks generally moved higher overnight while the UK FTSE was the only detractor amongst European Indices.

AUD EXCHANGE RATES:

AUD/USD – 0.7096

AUD/GBP – 0.5483

AUD/EUR – 0.6270

AUD/NZD – 1.0371

AUD/JPY – 78.516

OTHER MARKETS:

All Ords (XAO) – 6,172

Gold – A$1,860/oz

Silver –  A$22.16/oz

WTI – US$56.39/barrel

DATA RELEASES TODAY:

AUD – Monetary Policy Meeting Minutes at 11.30am

GBP - Average Earnings Index 3m/y at 8.30pm

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Topics: Market, Report

Market Update - 15th February 2019 - AUD Gains Against The GBP & USD Amid Failed Brexit Vote And Weak Data

Posted by Patrick Downes on February 15, 2019 at 9:44 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 Mixed:

The AUD fell versus the EURO but rallied against the USD and GBP as weak U.S economic data and another failed Brexit vote overnight weighed on the Greenback and Pound. The latest failed Brexit vote pushes the U.K closer to a hard Brexit unless Theresa May can somehow negotiate a deal that will curry enough favour with both local MPs and the Euro zone chiefs. In the U.S retail sales fell for the first time since March, but the decline was the worst reading since June 2010 - nearly 9 years ago. Producer prices also fell. The poor retail sales reading along with weaker economic data more broadly likely takes any further rate hikes from the Federal Reserve off the table until later in the year. However, expect Fed Chairman Powell to have some comments on the economic data in his next speech.

Stocks & Commodities: 

U.S and European stocks again finished the session mixed, while our local market is tipped to open around a 1/3 of a percent lower at 10.00am. Commodities prices have also continued to come off the boil, but Iron Ore is holding above 600CNY a tonne, or US$88 for the 62% fines. The high grade 65% fines is fetching just on US$100 a tonne.

AUD EXCHANGE RATES:

AUD/USD – 0.7075

AUD/GBP – 0.5520

AUD/EUR – 0.6260

AUD/NZD – 1.0358

AUD/JPY – 78.201

OTHER MARKETS:

All Ords (XAO) – 6,139

Gold – A$1,847/oz

Silver –  A$21.99/oz

WTI – US$54.79/barrel

DATA RELEASES TODAY:

GBP - Retail Sales m/m at 8.30pm

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Topics: Market, Report

Market Update - 14th February 2019 - AUD Falls Despite Solid Gains For U.S Equities

Posted by Patrick Downes on February 14, 2019 at 8:31 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 Falls, Equities Gain:

The AUD fell overnight despite a bullish finish for global equities and good momentum as Trump declared talks with China are going 'very well' as the March 1 deadline of higher U.S tariffs on Chinese imports approaches. U.S stocks were led higher by the Dow, which finished up 0.46%, while the S&P finished up 0.3%; in Europe the best performer was the UK FTSE up just over 0.8%. The AUD's overnight declines takes it's falls since Tuesday morning to around half a percent evenly spread across the board.

Commodities Off The Boil: 

Commodities prices have continued to come off the boil in the past week with Zinc and Lead lower, while Iron Ore has held above 600CNY per tonne on the Chinese Dalian Futures market. Iron ore may have another significant move higher as Vale exports remain constrained following their tailings dam disaster. Higher iron ore and commodities prices more broadly should boost the bottom line for our miners which should in turn support GDP growth and even the AUD. I continue to watch the interrelationship between the AUD and Iron ore prices pretty closely.

Data Coming Up:

Not a great deal of economic data out today with only local MI Inflation numbers due at 11.00am. The data asks respondents to predict how much they think the price of goods and services will change during the next 12 months. A higher number shows consumers are confident and can manifest into higher real inflation, while a lower number could suggest respondents don't feel rosy about the economy at all and inflation is set to head lower. The number has been declining for the past year and a half.

AUD EXCHANGE RATES:

AUD/USD – 0.7056

AUD/GBP – 0.5484

AUD/EUR – 0.6260

AUD/NZD – 1.0400

AUD/JPY – 78.379

OTHER MARKETS:

All Ords (XAO) – 6,140

Gold – A$1,842/oz

Silver –  A$21.95/oz

WTI – US$54.29/barrel

DATA RELEASES TODAY:

AUD – MI Inflation Expectations at 11.00am

USD - Core Retail Sales m/m & Producer Price Index at 12.30am

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Topics: Market, Report

Market Update - 12th January 2019 - AUD Declines Continue While China/U.S Trade Talks Edge Closer To Deadline

Posted by Patrick Downes on February 12, 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.

AUD Declines Gain Momentum:

It would appear comments from RBA Governor Lowe last Wednesday continue to drag on the Aussie Dollar with a clear bias to the downside following comments that he'll watch future data closely and that the next move may be a cut if required. AUD/USD and AUD/EUR both declined around half a percent, while AUD/GBP fell 0.7% despite poorer than anticipated economic data out of the U.K overnight. The market may be seeing the poor data as a sign the next move from the Bank of England will also be a rate cut or some form of stimulus.

Stocks/Commodities Mixed: 

European stocks were the best performers overnight, up around 0.8-1%, while U.S equities excluding the Dow (down 0.21%) eked out very small gains. Commodities prices excluding iron ore have continued to come off the boil as "investors continue to weigh up the prospects for the success of this week’s high-level U.S.-China trade talks -- coming just days before the March 1 deadline for higher tariffs." Iron ore prices capped out at their full allowable gain yesterday at 8% on the Chinese iron ore futures market, with further gains expected today. The big iron ore and commodities stocks on the ASX have all had their earnings forecasts ratcheted up substantially and may be the one bright spot on our market this week with the banks, retail, and now aged care (Royal Commission into Aged Care kicked off yesterday) all under pressure.

Data Out Today:

Home loans numbers and NAB Business confidence are due out at 11.30am. Home loans numbers should decline again, while it's likely also that Business Confidence could be on the nose leading up the election.

AUD EXCHANGE RATES:

AUD/USD – 0.7033

AUD/GBP – 0.5460

AUD/EUR – 0.6230

AUD/NZD – 1.0447

AUD/JPY – 77.658

OTHER MARKETS:

All Ords (XAO) – 6,128

Gold – A$1,852/oz

Silver –  A$22.24/oz

WTI – US$52.65/barrel

DATA RELEASES TODAY:

AUD - Home Loans m/m and NAB Business Confidence at 11.30am

GBP - BOE Gov Carney Speaks at midnight

USD - Fed Chair Powell Speaks at 4.45am (tomorrow morning)

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Topics: Market, Report

Market Update - 11th February 2019 - AUD Ends Terrible Week Down Nearly 3%, Iron Ore Still On A Tear

Posted by Patrick Downes on February 11, 2019 at 8:50 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 Off Nearly 3% Through The Week:

AUD/USD has continued its slide through the weekend and starts Monday nearly two cents lower than this time last week when AUD/USD was trading a little over 0.7250. It's a similar story for AUD/JPY, AUD/GBP and AUD/EUR which have all also succumbed to selling pressure following last weeks dovish comments from the RBA and generally weaker economic data.

U.S Stocks Finish Week Slightly Lower:

U.S stocks finished Friday's session little changed, while European stocks fell with the German DAX down over 1%. The flat finish in the U.S sees our local index likely to start the morning flat with the ASX 200 hovering just above the 6,070 level - the recent high was around 6,350 back in August. Metals prices followed the same trajectory as the AUD losing ground during the week, with the exception of iron ore which remains on a tear. Chinese businesses head back to the office today after a week long break and it'll certainly be interesting to watch the iron ore futures price as steel mills get back to business. Some forecasts now have iron ore to hit $US100 a tonne following the Vale mine disaster. These sorts of prices would be an absolute boon for our iron ore miners.

No economic data out locally today, however we see a raft of data out of the U.K tonight with the release of GDP and manufacturing numbers. Those with GBP exposures would be wise to book ahead of tonight's releases to avoid risk.

AUD EXCHANGE RATES:

AUD/USD – 0.7061

AUD/GBP – 0.5443

AUD/EUR – 0.6236

AUD/NZD – 1.0479

AUD/JPY – 77.516

OTHER MARKETS:

All Ords (XAO) – 6,136

Gold – A$1,847/oz

Silver –  A$22.25/oz

WTI – US$52.93/barrel

DATA RELEASES TODAY:

GBP - GDP & Manufacturing Production at 8.30pm

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Topics: Market, Report

Market Update - 7th February 2019 - AUD Slammed As RBA Governor Lowe Suggests Next Move A Cut

Posted by Patrick Downes on February 7, 2019 at 8:41 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 Savaged By RBA Comments:

The AUD fell yesterday as RBA Governor Lowe in a speech at the National Press Club in Sydney suggested slow growth & inflation could force the RBA to lower interest rates if economic data didn't improve as they expect. Essentially they began the process of telegraphing to the market that the next move may be a rate cut as opposed to a rate hike. This speech followed the RBA statement on Tuesday which removed some key wording about the next move likely to be a rate rise and was obviously quite a shock to the market; as a result the AUD dropped almost immediately by over 1% yesterday across the board. This morning we're down further, with AUD/USD the worst performer back below 0.7100.

Equities Set To Open Higher:

Aussie equities performed well yesterday while overnight U.S & European equities declined but only marginally. Our local market is expected to open around 0.17% higher this morning. Metals prices after a great run through January have started to sell off a little in the early part of February, but some forecasts have copper, zinc and iron far higher by year end which would certainly be bullish for our major miners like BHP, RIO, FMG and even the refurbished New Century Zinc mine which is reprocessing tailings from the old Century Zinc mine.

AUD EXCHANGE RATES:

AUD/USD – 0.7088

AUD/GBP – 0.5471

AUD/EUR – 0.6232

AUD/NZD – 1.0393

AUD/JPY – 78.001

OTHER MARKETS:

All Ords (XAO) – 6,091

Gold – A$1,835/oz

Silver –  A$22.02/oz

WTI – US$54.17/barrel

DATA RELEASES TODAY:

China – Bank Holidays all week (no payments processed)

USD – Fed Chair Powell Speaks Speaks at 11.00am

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Topics: Market, Report

Market Update - 6th February 2019 - AUD Whipsawed By Economic Data, Moves Slightly Higher

Posted by Patrick Downes on February 6, 2019 at 8:33 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 Whipsaws On Data: 

The Aussie Dollar whipsawed back and forth yesterday initially falling around half a percent following more poor retail sales data which saw shoppers decrease their spending by nearly half a percent during the key December shopping month. However that bad news which dragged on the Aussie Dollar through the morning was followed by a more upbeat than expected RBA in the afternoon, who suggested inflation and growth remain on target and as a result suggested there would likely be no need to cut interest rates in the foreseeable future. This helped the AUD to do a complete U-turn turning a half a percent down-day into half a percent of gains in a matter of minutes. The market was clearly expecting the RBA to capitulate and start telegraphing an interest rate cut, which they did not.

BRC Recommendations Boost For Banks: 

The findings from the Banking Royal Commission (BRC) delivered after the bell Monday afternoon had the result of pushing local bank stocks higher during yesterday's trade. Local bank stocks moved higher as opposed to lower as the consensus view from the market was that the BRC recommendations would likely benefit the banks at the detriment of the mortgage broking industry. However there are probably still issues of trust which the banks need to rebuild along with digging through the over 70 recommendations from the BRC; as such the impressive moves yesterday could well be short lived.

Ahead: 

Ahead today is a speech from RBA Governor Phillip Lowe around midday followed by Trump's state of the union speech around 1pm AEST.

AUD EXCHANGE RATES:

AUD/USD – 0.7203

AUD/GBP – 0.5552

AUD/EUR – 0.6308

AUD/NZD – 1.0462

AUD/JPY – 79.215

OTHER MARKETS:

All Ords (XAO) – 6,068

Gold – A$1,817/oz

Silver –  A$21.92/oz

WTI – US$53.88/barrel

DATA RELEASES TODAY:

China – Bank Holidays all week (no payments processed)

AUD – RBA Gov Lowe Speaks at 12.30pm

USD - President Trump Speaks at 1.00pm

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Topics: Market, Report

Market Update - 5th February 2019 - AUD Flat Despite Poor Building Approvals, RBA Meet At 2.30PM

Posted by Patrick Downes on February 5, 2019 at 8:44 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/USD Down Marginally, Others Flat:

Down against the Greenback and flat against the other majors sums up the Aussie dollars movements overnight with most of the action occurring in the morning with the release of another set of shockingly poor building approvals data. We saw an 8.4% decline in the headline figure month on month, while comparing December 2018 with December 2017 and we see a more than 20% decline in the number of houses/units approved for construction. It's a further nail into an already struggling housing market, but it's starkly obvious that investors have completely deserted the housing market after an exceptional run. Eventually the music was going to stop and that has well and truly occurred.

U.S equities and metals prices performed well again overnight with the local market set to follow that lead with Futures markets suggesting the ASX200 will start the morning session up 0.75%. China remains on holidays for the remainder of this week so payments into China will continue to be delayed.

Retail Sales For December Due:

More important local economic data is due out today with retail sales and trade balance numbers at 11.30am, followed by the RBA rate decision at 2.30pm. Retail sales numbers released today are for the all important December Christmas period and so will be watched closely by the RBA before they decide on interest rates. No one really knows what the RBA is thinking right now, however we should have a clearer picture this afternoon when they hold rates and provide their accompanying rate statement.

AUD EXCHANGE RATES:

AUD/USD – 0.7195

AUD/GBP – 0.5510

AUD/EUR – 0.6290

AUD/NZD – 1.0462

AUD/JPY – 79.136

OTHER MARKETS:

All Ords (XAO) – 5,963

Gold – A$1,816/oz

Silver –  A$21.96/oz

WTI – US$54.90/barrel

DATA RELEASES TODAY:

China – Bank Holidays all week (no payments processed)

AUD – Retail Sales m/m and Trade Balance at 11.30am

AUD - RBA Rate Statement & Cash Rate at 2.30pm

USD - ISM Non-Manufacturing PMI at 2.00am (tomorrow morning)

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Topics: Market, Report

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

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