Compass Global Markets' Blog

Market Update - 19th January 2018 - Base Metals Lose Ground But AUD Grinding Higher

Posted by Patrick Downes on January 19, 2018 at 8:49 AM

Despite base metals and commodities in general losing a bit of their shine over the past few sessions AUD has managed to hold ground against the Greenback and Euro. Commodities markets have been dragged down in recent days by profit taking following a very strong surge in metals prices since early December. I remain bullish on the industrial and precious metals through 2018 given we have rising global growth and inflation looking like it wants to pop higher. Inflation, growth and a weaker USD which is what we've seen more recently all suggest AUD/USD may test previous highs reached between July-September around 0.8000-0.8100. So exporters may need to hold tight, while for the importers its certainly a good time to take advantage of rates while they're up - don't miss the opportunity.

Data released yesterday showed the unemployment rate rose while far more jobs were created than had been forecast which is a bit of a head scratcher until you drill down into the results and what we see is that while we had a bumper employment figure with 35,000 new jobs created, 20,500 became unemployed!

The only data out today is UK retail sales at 8.30pm.

AUD EXCHANGE RATES:

AUD/USD – 0.7996

AUD/GBP – 0.5753

AUD/EUR – 0.6533

AUD/NZD – 1.0943

AUD/JPY – 88.794

USD/BTC - $11,953

COMMODITIES: 

Gold – A$1659/oz

Silver –  A$21.19/oz

WTI – US$63.73/barrel

DATA RELEASES TODAY:

GBP - Retail Sales at 8.30pm

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Topics: Report, Market

Market Update - 17th January 2018 - Bitcoin Gets Whacked, While Commodities & The AUD Hold Gains

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

The Aussie dollar has moved very little overnight with the local currency more or less tracking at the same levels we saw about this time yesterday morning. However in the crypto world currencies and associated tokens took a hammering with BITCOIN the worst affected off a whopping 25% and now nearly 50% lower than highs reached at the mania stage of the boom way back on the 17th of December - BTC at one point was worth nearly 20,000USD per unit. The next key level for BTC to hold is 10,000USD but if it fails there it's likely headed to 8,000USD before finding support.

Equities were mixed over night with U.S stocks taking a breather down about half a percent, while European equities fared better up around 0.3-0.5%. Commodities also remained resilient with the lower USD helping to support commodities prices.

Ahead today is Westpac Consumer Sentiment and Home Loans numbers at 10.30am and 11.00am respectively, these are both hardly market moving data however positive numbers here will certainly support a global shift in sentiment which suggests growth and activity is coming back.

AUD EXCHANGE RATES:

AUD/USD – 0.7961

AUD/GBP – 0.5773

AUD/EUR – 0.6492

AUD/NZD – 1.0944

AUD/JPY – 87.962

COMMODITIES: 

Gold – A$1681/oz

Silver –  A$21.62/oz

WTI – US$63.77/barrel

DATA RELEASES TODAY:

AUD - Westpac Consumer Sentiment T 10.30am

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Topics: Report, Market

Market Update - 16th January 2018 - AUD/USD Headed For 0.8000 Once Again?

Posted by Patrick Downes on January 16, 2018 at 8:39 AM

AUD/USD has ripped higher again overnight on the back of continuing USD weakness and a pull back in the U.S Dollar Index which is essentially a composite price of the USD vs. a basket of foreign currencies. The DXY as it is known is threatening to break below 90 a level it has not been at since late 2014. Whats driving this renewed USD weakness is a very difficult thing to determine but it could be a range of factors including higher commodities prices and accelerating growth in Europe and Japan following a period of stagnation or flat growth.

New motor vehicle sales are due at 11.30am and have been very strong of late, so probably expect more of the same - however the figure has little impact on the AUD generally. UK CPI is at 8.30pm which could impact AUD/GBP which has gone on a nice little run higher since early December.

AUD EXCHANGE RATES:

AUD/USD – 0.7968

AUD/GBP – 0.5774

AUD/EUR – 0.6493

AUD/NZD – 1.0911

AUD/JPY – 88.052

COMMODITIES: 

Gold – A$1682/oz

Silver –  A$21.86/oz

WTI – US$64.72/barrel

DATA RELEASES TODAY:

AUD - New Motor Vehicle Sales at 11.30am

GBP - CPI at 8.30pm

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Topics: Report, Market

Market Update - 15th January 2018 - AUD/USD Through 0.7900 For First Time Since September

Posted by Patrick Downes on January 15, 2018 at 8:55 AM

The only data released Friday and over the weekend was U.S CPI and Retail Sales, which both came in more or less on expectations. AUD/USD however continues to slowly grind higher with the currency pair now hovering around 0.7900 on the wholesale market - a level we've not seen since September. AUD/GBP and AUD/EUR have lost some shine with both currency pairs losing ground over the past few sessions.

An absence of economic data out today probably suggests little movement in markets.

AUD EXCHANGE RATES:

AUD/USD – 0.7897

AUD/GBP – 0.5757

AUD/EUR – 0.6484

AUD/NZD – 1.0898

AUD/JPY – 87.803

COMMODITIES: 

Gold – A$1691/oz

Silver –  A$21.78/oz

WTI – US$64.32/barrel

DATA RELEASES TODAY:

No data out today or tonight

USD Bank Holiday in the U.S Tonight (USD payments delayed one day)

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Topics: Report, Market

Market Update - 12th January 2018 - AUD/USD Continues Stellar Rise Through Early Part Of 2018

Posted by Patrick Downes on January 12, 2018 at 8:24 AM

Much better than anticipated retail sales figures released yesterday morning put a rocket under the Aussie dollar helping it to arrest losses and finish the day ahead of where we started. Officially the retail sales data came in at 1.2% for the month of November (retail data is released a month and 10 days or so after the month ends), which was way above the 0.4% consensus forecast by economists who had expected further weakness in the retail sales sector of our economy. The strong number bodes well for a potentially great December figure, particularly given the likes of MYER et al. would have benefited from an extra weekend of trading with Christmas day falling on a Monday. AUD/USD is edging towards 0.7900, while AUD/GBP has made solid gains and is now back above 0.5820 on the wholesale inter-bank market. The only drawback is AUD/JPY which has fallen nearly 2% since Monday.

Ahead this evening is US retail sales and CPI numbers so we could expect to see some volatility as we see numbers for the just finished Christmas shopping period in the U.S. Forecasts are for 0.3% growth in the core retail sales numbers and core CPI at 0.2%.

AUD EXCHANGE RATES:

AUD/USD – 0.7890

AUD/GBP – 0.5827

AUD/EUR – 0.6557

AUD/NZD – 1.0876

AUD/JPY – 87.779

COMMODITIES: 

Gold – A$1675/oz

Silver –  A$21.52/oz

WTI – US$63.49/barrel

DATA RELEASES TODAY:

USD - CPI and Retail Sales at 12.30am

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Topics: Report, Market

Market Update - 11th January 2018 - Retail Sales Due At 11.30am, May Provide Further AUD Boost

Posted by Patrick Downes on January 11, 2018 at 8:33 AM

The Aussie dollar made small gains overnight despite weaker equities markets and a subdued commodities market. Iron ore, which is probably our most important export has continued to post gains through the early stages of 2018 after a tumultuous year in which the commodity traded in a very wide range between US$95 a tonne and US$53 a tonne. Right now we're closing in on US$80 a tonne with some forecasters suggesting US$100 a tonne is not out of the realm of possibility - I tend to think that's unlikely unless a country like India, the U.S or Japan rapidly increase their infrastructure spending as more infrastructure generally equals more steel!

Chinese economic data was mixed yesterday however U.K manufacturing production came in better than expected for the month of November, additionally the October figure was revised higher. AUD/GBP didn't fall however rather we saw the currency pair move higher busting back above 0.5800 for the time being.

Ahead today is local retail sales numbers at 11.30am. The figures we will see are not for December but rather November's retail sales numbers so we should get a glimpse into what may be in store for the December figure which will be released early next month. Assuming a strong number we could probably expect the AUD to track higher.

AUD EXCHANGE RATES:

AUD/USD – 0.7838

AUD/GBP – 0.5802

AUD/EUR – 0.6555

AUD/NZD – 1.0892

AUD/JPY – 87.324

COMMODITIES: 

Gold – A$1680/oz

Silver –  A$21.67/oz

WTI – US$63.31/barrel

DATA RELEASES TODAY:

CNY – CPI and PPI at 12.30pm

GBP – Manufacturing Prodn at 8.30pm

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Topics: Report, Market

Market Update - 10th January 2018 - AUD Remains Buoyant While Building Approvals Surprise To The Upside

Posted by Patrick Downes on January 10, 2018 at 8:32 AM

Building approvals out yesterday morning well and truly bucked the trend with a staggering 21,000 new units approved for construction - I guess we can always use more apartments? Probably not, but with interest rates at all time lows there are clearly developers still trying to squeeze those last few dollars out of this once in a lifetime property boom.

The Aussie dollar fell from recent highs over the past 24 hours, but not dramatically with AUD/USD down by only half a percent or so, while AUD/EUR remains unchanged at 0.6550 on the wholesale market. Commodities remain buoyant as Zinc, Copper and Nickel remain near recent highs.

A bit of Chinese economic data is out today in CPI and PPI otherwise known as the Consumer and Producer Price Index - not surprisingly a rising number is seen as good as both higher CPI and PPI suggests growth remains strong in the worlds most populace nation. U.K Manufacturing Production is out later this evening as is tipped to come in at a paltry 0.3%.

AUD EXCHANGE RATES:

AUD/USD – 0.7821

AUD/GBP – 0.5776

AUD/EUR – 0.6551

AUD/NZD – 1.0913

AUD/JPY – 88.094

COMMODITIES: 

Gold – A$1679/oz

Silver –  A$21.73/oz

WTI – US$62.86/barrel

DATA RELEASES TODAY:

CNY - CPI and PPI at 12.30pm

GBP - Manufacturing Prodn at 8.30pm

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Topics: Report, Market

Market Update - 9th January 2018 - Commodities & Metals Push Higher Supporting AUD

Posted by Patrick Downes on January 9, 2018 at 8:56 AM

The AIG Construction index has continued its trend lower with the latest data released yesterday showing a fall to 52 on the index following weaker building approvals and a generally softening construction and property market during 2017. Above 50 indicates expansion while below 50 indicates contraction in the construction industry, so if the index continues to decline we could expect to see increased downward pressures on the housing market by way of weaker construction numbers and the before mentioned stalling in building approvals.

The Aussie dollar however has managed to hold up pretty well with AUD/USD still above 0.7800, while AUD/EUR and AUD/GBP are trading at 0.6550 and 0.5778 respectively on the back of a very bullish commodities sector led by iron ore and the electric vehicle metals (Lithium, Cobalt, Copper and Nickel).

Building Approvals and ANZ Job Ads are due out this morning at 11.30am. Building Approvals are tipped to come in weaker again at -1% or thereabouts, while ANZ Job Ads have no forecast. As mentioned above building approvals have very much stalled since August with negative or flat growth since then - you need to go way back to late 2008, following the GFC to find a similar picture. How the housing market plays out with respect to a soft or hard landing remains to be seen, however caution is probably the best bet.

AUD EXCHANGE RATES:

AUD/USD – 0.7840

AUD/GBP – 0.5778

AUD/EUR – 0.6551

AUD/NZD – 1.0923

AUD/JPY – 88.653

COMMODITIES: 

Gold – A$1683/oz

Silver –  A$21.85/oz

WTI – US$61.91/barrel

DATA RELEASES TODAY:

AUD – Building Approvals and Job Ads at 11.30am

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Topics: Report, Market

Market Update - 8th January 2018 - AUD Gives Importers A Very Happy New Year

Posted by Patrick Downes on January 8, 2018 at 8:33 AM

Good morning and a very Happy New Year to all and to the Aussie dollar which has screamed past 0.7700 over the past few weeks. I'm back into the full swing of things after a nice semi two-week break (I say 'semi' as I never really stop working, such is the life of a full service 24/7 foreign exchange broker). I think even booked a deal on Christmas Day.

So as you may or may not be aware AUD/USD has gone on quite a run over the break with AUD/USD breaking through 0.7800 for the first time since October, while AUD/EUR and AUD/GBP are only marginally higher since my final report late December. This reason why we sometimes see big moves in currency markets over the Christmas/New Year period stems from a lack of liquidity in the market, meaning large one off trades can have a larger than normal impact on the market given the absence of participants.

A quiet week to kick off the working year with only local retail sales due later in the week followed by U.S retail sales and CPI on Friday evening. The U.S equities market has been on an absolute tear over the Christmas break with the DOW breaking through 25,000 for the first time ever and solid retail sales numbers may provide yet further impetus for it to charge higher still. The AUD and local equities have performed well because of stronger commodities prices and the fact that global growth continues to pick up steam.

AUD EXCHANGE RATES:

AUD/USD – 0.7856

AUD/GBP – 0.5789

AUD/EUR – 0.6530

AUD/NZD – 1.0955

AUD/JPY – 88.801

COMMODITIES: 

Gold – A$1678/oz

Silver –  A$21.91/oz

WTI – US$61.56/barrel

DATA RELEASES TODAY:

JPY – Bank Holiday

AUD - Construction Index at 9.30am

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Topics: Report, Market

Market Update - 21st December 2017 - AUD Little Changed Since Yesterday, But JPY On The Move Ahead Of BOJ

Posted by Patrick Downes on December 21, 2017 at 8:46 AM

Well remarkably AUD/USD is at the exact same level as this time yesterday and has since last Friday maintained a range of about 60 points - which is a tight range by any measure. AUD/JPY is the only real mover with the currency pair up about half a percent or so ahead of the Bank of Japan's next interest rate move and policy statement for 2018 which will be released sometime today - the BOJ is never specific with the timing of this announcement, which is strangely quite contradictory to the way the Japanese run their train system.

In the U.S we saw Trump and the Republican party pass a tax bill which was broadly opposed by Democrats and soundly applauded by Republicans but when looking at the details looks like a massive case of paying off the rich for their support of the Republican party in the 2016 elections. How this tax bill helps the U.S depends who you speak to however broadly speaking economists see it as a case of trickle down economics which has never worked. Only time will tell as to how this tax bill plays out. Let's revisit in a year.

This will be the last report of the year from me and I'll return to normal reporting (near daily) from the 8th of January. I'd like to take this opportunity to thank all my 200 odd clients for their support during 2017 and the 300 odd others who are not yet clients but still enjoy reading my report each morning, thanks for reading. Have a great Christmas/New Years break and I look forward to reconnecting with many of you in the New Year.

*As for getting deals done, business as usual, email or call me for payments/hedging throughout the break. 24/7.

AUD EXCHANGE RATES:

AUD/USD – 0.7663

AUD/GBP – 0.5727

AUD/EUR – 0.6453

AUD/NZD – 1.0986

AUD/JPY – 86.921

COMMODITIES: 

Gold – A$1650/oz

Silver –  A$21.10/oz

WTI – US$58.05/barrel

DATA RELEASES TODAY:

JPY - BOJ Policy Rate (interest rate decision)

USD - Final GDP at 12.30am

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Topics: Report, Market

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