Compass Global Markets' Blog

Market Update - 19th December 2018 - AUD Finishes Overnight Session Unchanged

Posted by Patrick Downes on December 19, 2018 at 8:46 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.

RBA Minutes released yesterday showed that the RBA is not overly concerned about the global economy but did note that the U.S/China trade standoff had softened growth somewhat in most advanced economies. Locally the RBA noted that GDP, wages growth and other indicators appear to be ticking along at around their forecasts.

No other economic data was released yesterday or overnight and with equities markets in the U.S flat the AUD finished the overnight session more or less unchanged. Aussie equities look set to open around 1% lower though as U.S equities futures have turned negative after the bell to the tune of around half a percent.

UK CPI is due out this evening.

AUD EXCHANGE RATES:

AUD/USD – 0.7154

AUD/GBP – 0.5641

AUD/EUR – 0.6290

AUD/NZD – 1.0443

AUD/JPY – 80.536

USD/BTC – $3,516

OTHER MARKETS:

All Ords (XAO) – 5,661

Gold – A$1,738/oz

Silver –  A$20.39/oz

WTI – US$46.35/barrel

DATA RELEASES TODAY:

GBP - CPI at 8.30pm

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Topics: Market, Report

Market Update - 18th December 2018 - Equities, Oil & AUD Move Lower As Traders Mull Fed Move

Posted by Patrick Downes on December 18, 2018 at 8:23 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 economic data out overnight, however U.S retail sales numbers were released Friday evening and came in bang on estimates at 0.2% for the month. All action and eyes though seem to be on the U.S Federal Reserve and their rate announcement early Thursday morning. Surveyed economists predict the Fed will continue to hike rates regardless of the recent selloff in U.S and global equities and despite Donald Trump's objections. If the Fed move again, U.S interest rates will be at 2.5% on Thursday morning, 1% higher than the RBA set interest rate here.

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Topics: Market, Report

Market Update - 14th December 2018 - AUD Lower In Choppy Trade Overnight & Hints Next Move From RBA May Be A Cut

Posted by Patrick Downes on December 14, 2018 at 8:39 AM

The Aussie Dollar is lower against the Greenback, Euro and Pound but up vs. the Kiwi following a mixed session overnight for U.S and European equities. In the U.S the Dow ended up 0.29% while the NASDAQ fell 0.39% and in Europe a similar theme with Euro Stoxx 50 up 0.15% while the UK FTSE and German DAX finished lower by a very insignificant 0.04%. Chinese/U.S trade tensions are continuing to simmer but small steps in the right direction appear to be forthcoming. Examples of this include China resuming imports of U.S soybeans while overnight a reiteration from Beijing that "its officials were in close contact with Washington counterparts."

Locally, a lot of talk on Financial Twitter (FinTwit) and in local news outlets is speculation that the next move from the RBA could be a rate cut as opposed to the before-mentioned likelihood that the next move would be a rate hike. Local economic data has been choppy at best lately, with strong employment growth and incremental wage increases offset by continued poor retail sales numbers, weak housing market and recent below expectations GDP data. Certainly it's hard to determine what the next RBA move will be and it depends alot on the data, but should they begin to hint at a rate cut as opposed to a rate hike then their is a chance we see a significantly lower AUD, the opposite is true if the RBA stays on course with their bullish GDP predictions.

A lower AUD is great for exporters, but for importers not so great. Those clients with razor thin  margins or who'd like to lock in their profits on their imports would be advised to use Forward Contracts. The AUD has been in decline for the better part of a year and those clients utilising Forward Contracts have been far better off than those simply paying at spot.

AUD EXCHANGE RATES:

AUD/USD – 0.7194

AUD/GBP – 0.5674

AUD/EUR – 0.6326

AUD/NZD – 1.0490

AUD/JPY – 81.745

USD/BTC – $3,236

OTHER MARKETS:

All Ords (XAO) – 5,735

Gold – A$1,720/oz

Silver –  A$20.44/oz

WTI – US$53.29/barrel

DATA RELEASES TODAY:

USD - Core Retail Sales m/m at 12.30am (tomorrow morning)

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Topics: Market, Report

Market Update - 12th December 2018 - AUD Moves Marginally Higher As Markets Take A Breather

Posted by Patrick Downes on December 12, 2018 at 8:32 AM

U.S stocks finished the overnight session more or less flat and so in the absence of volatility allowed the AUD and commodities prices to push marginally higher across the board. The best performers were iron ore and AUD/GBP which added half a percent as Brexit worries continue to linger.

In more bad news for the housing market we saw a 1.5% decline in house prices in the latest quarter, which takes us to the longest stretch of losses since the early part of this decade. We've now had three consecutive quarters of declines and anything more than four quarters would be the worst this century. My personal view is that we'll see continued declines through most of 2019 as a result of continued tighter credit/lending and grandfathering/changes to both negative gearing and CGT (Labour likely to win next years elections and make changes to negative gearing and CGT).

Local Westpac Consumer Sentiment numbers are out this morning at 10.30am followed by US consumer prices around midnight AEST. No forecast is given for Westpac Consumer Sentiment, however recent numbers have been generally flat during 2018, expect more of the same. U.S CPI is anticipated to be flat with a forecast of no change in consumer prices.

AUD EXCHANGE RATES:

AUD/USD – 0.7170

AUD/GBP – 0.5737

AUD/EUR – 0.6330

AUD/NZD – 1.0444

AUD/JPY – 81.331

USD/BTC – $3,346

OTHER MARKETS:

All Ords (XAO) – 5,651

Gold – A$1,726/oz

Silver –  A$20.22/oz

WTI – US$51.86/barrel

DATA RELEASES TODAY:

AUD – Westpac Consumer Sentiment at 10.30am

USD - CPI at 12.30am (tomorrow morning)

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Topics: Market, Report

Market Update - 11th December 2018 - AUD/GBP Surges As UK Mull Brexit Deal, ASX Hits Two-Year Low

Posted by Patrick Downes on December 11, 2018 at 8:22 AM

AUD/GBP is the biggest mover overnight, with the Pound losing around 1.5% against the Aussie Dollar as politicians in the U.K continue to debate and compromise on a Brexit deal that works for all. Prime Minister Theresa May is by some accounts playing chicken, with the UK set to crash out of the EU on March 29 deal or no deal. The likely scenario though is that a deal will come sometime before this date which benefits both the UK and the EU, that is assured. Brexit with no EU trade deal would be a disaster for the UK and the Pound. Against the other majors the AUD is up marginally, but down vs the NZD.

The other big news yesterday was that the ASX has wiped out two years of gains since the start of September and is now trading at the same level as back in December of 2016, yes, 2016, not 2017. By comparison the U.S Dow Jones index is back at June 2018 levels. To say our equities market is fickle is an understatement; however with the banking royal commission, tech stocks on the nose in the U.S and mining stocks reeling from Trumps incessant trade war with China then it's no surprise that we find ourselves back in time two years. Also a surprise slowing in GDP growth last Wednesday also hasn't helped things.

Ahead today a chance to see how businesses are coping in this environment with NAB business confidence due at 11.30am this morning along with the quarterly house price index which is expected to have tanked further as it has been all year.

AUD EXCHANGE RATES:

AUD/USD – 0.7155

AUD/GBP – 0.5690

AUD/EUR – 0.6297

AUD/NZD – 1.0420

AUD/JPY – 81.10

USD/BTC – $3,375

OTHER MARKETS:

All Ords (XAO) – 5,627

Gold – A$1,731/oz

Silver –  A$20.21/oz

WTI – US$50.92/barrel

DATA RELEASES TODAY:

AUD - House Price Index & NAB Business Confidence at 11.30am

GBP - Average Earnings Index at 8.30pm

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Topics: Market, Report

Market Update - 10th December 2018 - Markets Sell Off As Yield Curve Inverts & Trade Tensions Rise

Posted by Patrick Downes on December 10, 2018 at 9:01 AM

Financial markets continued their sour tone Friday evening and still roiling from the dramatic arrest of Huawei's CFO we saw poor U.S jobs numbers that not only failed to meet expectations but also showed average earnings declined during November. In addition to that and perhaps more worrying to U.S financial markets was that U.S yield curves inverted for the first time in a decade, which means basically five year treasuries now have a lower yield than the two year treasury note. Throughout history when the yield curve inverts like this typically a recession is around the corner (occurs within the next couple of years) hence the substantial sell off Friday evening in U.S stocks, which lost between 2.24% and 3%, with the NASDAQ again the biggest drag.

The Aussie Dollar didn't fare much better losing about half to 3/4 of a percent over the weekend with AUD/USD now well and truly back below 0.7200 vs. the Greenback and 0.6300 vs. the Euro. In addition to this it appears poor GDP numbers in the middle of last week suggest the next move by the RBA may no longer be a rate hike but rather a rate cut given the sharp decline in quarterly GDP to an annualised figure of just 1.2%. Of course in Australia we don't annualize the figure like in the U.S but 0.3% GDP growth in the latest quarter vs. the anticipated 0.6% growth certainly has taken the wind out of the AUD's sails, for the time being.

Ahead today is home loans numbers followed by UK manufacturing and GDP figures.

AUD EXCHANGE RATES:

AUD/USD – 0.7150

AUD/GBP – 0.5614

AUD/EUR – 0.6271

AUD/NZD – 1.0425

AUD/JPY – 80.541

USD/BTC – $3,545

OTHER MARKETS:

All Ords (XAO) – 5,757

Gold – A$1,735/oz

Silver –  A$20.36/oz

WTI – US$52.26/barrel

DATA RELEASES TODAY:

AUD - Home Loans at 11.30am

GBP - Manufacturing and GDP at 8.30pm

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Topics: Market, Report

Market Update - 7th December 2018 - Arrest Leads To Sell-Off In AUD & Risk Assets

Posted by Patrick Downes on December 7, 2018 at 8:11 AM

The Aussie dollar dipped with commodities and stocks overnight as risk aversion gripped markets yet again following the arrest in Canada of high profile Chinese businesswomen Wanzhou Meng for allegedly breaching U.S sanctions related to Iran. Obviously with markets already on eggshells the arrest raised further doubts that China and the U.S would ever sort out their trade differences. The AUD lost about half a percent while U.S stocks, thanks to a late rally finished about half a percent lower, the Nasdaq has actually made a miraculous recovery to finish half a percent higher at the writing of this report.

Local retail sales delivered yesterday came in bang on expectations at 0.3% which will be welcomed by the retail industry who have had a tough couple of years. U.S non-farm payrolls and the unemployment rate are due tonight around midnight, this can move the market as such clients wishing to avoid risk would be advised to book ahead of tonight's jobs numbers.

AUD EXCHANGE RATES:

AUD/USD – 0.7204

AUD/GBP – 0.5630

AUD/EUR – 0.6328

AUD/NZD – 1.0481

AUD/JPY – 81.276

USD/BTC – $3,596

OTHER MARKETS:

All Ords (XAO) – 5,736

Gold – A$1,711/oz

Silver –  A$20.00/oz

WTI – US$51.82/barrel

DATA RELEASES TODAY:

USD - Fed Chair Powell Speaks at 10.30am

USD - Non-Farm Employment Change at 12.30am (tomorrow morning)

USD - Unemployment Rate at 12.30pm (tomorrow morning)

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Topics: Market, Report

Market Update - 6th November 2018 - AUD Declines As U.S Mourns Passing Of George H. W. Bush

Posted by Patrick Downes on December 6, 2018 at 8:57 AM

U.S equities didn't trade overnight as the country observed a National Day of Mourning following the death of former President George H. W. Bush. U.S stock futures finished the public holiday flat and our local market is expected to open flat this morning. In the absence of U.S trade and a poor GDP figure yesterday morning, the AUD fell away and is off against all the major currencies. GDP came in below estimates at 0.3% versus the anticipated headline figure of 0.6%. Base metal prices including iron ore and oil continued their rally with Zinc and Copper the best performers.

More local data out today with retail sales and trade balance numbers at 11.30am. Retail sales have been declining over the past few years as a result of high indebtedness and its hard to see this trend abating given rising interest rates and falling house prices. As a result estimates are that retail sales wouldn't have grown much more than 0.3% in the last month - weak retail sales numbers could see the AUD dragged lower, while a strong number would be encouraging for the RBA.

Trade Balance numbers are released at the same time as retail sales with the trade balance likely to have grown again as a result of a low Aussie Dollar and strong export activity particularly in the metals space.

AUD EXCHANGE RATES:

AUD/USD – 0.7239

AUD/GBP – 0.5677

AUD/EUR – 0.6377

AUD/NZD – 1.0510

AUD/JPY – 82.009

USD/BTC – $3,712

OTHER MARKETS:

All Ords (XAO) – 5,749

Gold – A$1,702/oz

Silver –  A$19.96/oz

WTI – US$53.05/barrel

DATA RELEASES TODAY:

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

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Topics: Market, Report

Market Update - 5th December 2018 - US Equities Get Slammed As Trump Calls Himself "The Tariff Man"

Posted by Patrick Downes on December 5, 2018 at 8:48 AM

Despite a considerable sell off of U.S equities overnight, the AUD has managed to hold ground versus the majors while commodity prices edged higher. The Nasdaq was the biggest loser, down 3.8% followed by the S&P500 and Dow which lost around 3%; Europe fared better only losing around half to one percent. Aussie equities are expected to have a poor opening with Futures suggesting a loss of around 1.5% - this could drag the Aussie lower through the day.

Aussie GDP figures are out at 11.30am. GDP is anticipated to have grown by 0.6% for the latest quarter which would suggest GDP on an annual basis is running at around 3.2%; this would be marginally below the 3.4% figure we saw for the end of the June quarter. Household spending was what drove the previous quarters headline figure to its highest point since 2012, so it'll be very interesting to see if we can keep up that pace despite the negative rhetoric about housing prices, weak retail, trade wars, etc. Goes without saying that a surprise to the upside here will see AUD move higher, while a particularly poor number will see AUD fall.

*Side note - Trump called himself "The Tariff Man" this morning in a tweet....no surprises that U.S equities got hammered. I'm starting to think that Donald Trump might have an IG Markets trading account and is trading equities on margin and moving the market with his tweets..........I'll leave that for Robert Mueller.

AUD EXCHANGE RATES:

AUD/USD – 0.7312

AUD/GBP – 0.5743

AUD/EUR – 0.6433

AUD/NZD – 1.0556

AUD/JPY – 82.457

USD/BTC – $3,847

OTHER MARKETS:

All Ords (XAO) – 5,797

Gold – A$1,686/oz

Silver –  A$19.78/oz

WTI – US$52.98/barrel

DATA RELEASES TODAY:

AUD – GDP q/q at 11.30am

EUR – ECB President Draghi Speaks at 7.30pm

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Topics: Market, Report

Market Update - 4th December 2018 - AUD Pares Some Gains, U.S Equities Move Higher On Positive Trade News

Posted by Patrick Downes on December 4, 2018 at 8:42 AM

Overnight the AUD pared gains made yesterday and is off around half a percent vs. the Greenback and Euro while advancing marginally against the Pound. Data released locally yesterday showed that building approvals continue to disappoint with the number of new dwellings approved dropping by 1.5% in the latest month. Housing prices in our most populous city are down a whopping 9.5% since July last year with CoreLogic expecting more of the same over the next 12 months with peak to trough losses around 15%.

Globally though things are looking a little better for equities, the AUD and commodities with Larry Kudlow (White House economic advisor) suggesting that more trade deals with China could be forthcoming. Obviously sorting out/putting to bed these trade disputes will be bullish for the global economy and risk assets such as the AUD. U.S & European equities jumped around 1-2% overnight which has set up for potentially another good day for equities locally. Commodities prices are up across the board.

Ahead today is the official RBA cash rate decision however expect no change to rates as they stand at 1.5%. Again the market and economists will pick through the RBA statement for any clues as to when/if ever rates might start to rise.

AUD EXCHANGE RATES:

AUD/USD – 0.7323

AUD/GBP – 0.5745

AUD/EUR – 0.6448

AUD/NZD – 1.0590

AUD/JPY – 83.235

USD/BTC – $3,809

OTHER MARKETS:

All Ords (XAO) – 5,856

Gold – A$1,674/oz

Silver –  A$19.57/oz

WTI – US$53.19/barrel

DATA RELEASES TODAY:

AUD – RBA Rate Statement & Cash Rate Decision at 2.30pm

GBP - BOE Gov Carney Speaks at 8.15pm

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Topics: Market, Report

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