Compass Global Markets' Blog

Market Update - 29th June 2018 - June Tough Month For The Aussie Dollar and Commodities

Posted by Patrick Downes on June 29, 2018 at 8:37 AM

Choppy equity markets, faltering commodities prices, trade war threats, risk-on and risk-off sum up much of the month of June, a month in which the Aussie Dollar fell almost three cents (4%) vs. the Greenback, two cents (3.5%) vs. the Euro and roughly 100 points or 2% vs. the Pound. In many respects it's probably also a month we'd prefer to quickly move on from.

In news overnight equities rallied in the U.S as U.S GDP came in a little below expectations perhaps pushing back fears the Federal Reserve may increase interest rates too quickly, while commodities prices made some gains again following a pretty poor month - iron ore was up 1% to almost US$65 a tonne for the benchmark 62% iron ore fines.

Other than that not much happening, but please if you're looking to take advantage of the small business instant asset write-off you'll need to make payments today as today is the last trading day of the 2017/18 financial year. Please speak with you accountant or bookkeeper for more details on the Governments small business instant asset write off.

AUD EXCHANGE RATES:

AUD/USD – 0.7345

AUD/GBP – 0.5617

AUD/EUR – 0.6352

AUD/NZD – 1.088

AUD/JPY – 81.175

USD/BTC – $5,923

OTHER MARKETS: 

All Ords (XAO) – 6,305

Gold – A$1,698/oz

Silver –  A$21.78/oz

WTI – US$72.77/barrel

DATA RELEASES TODAY:

No economic data

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Topics: Report, Market

Market Update - 28th June 2018 - Commodities Perform Better But AUD/USD Still On The Backfoot

Posted by Patrick Downes on June 28, 2018 at 8:31 AM

Stocks were mixed overnight falling in the U.S and rallying in Europe while commodities staged a small recovery led by Zinc, Iron Ore and a resilient Copper. The Aussie dollar however continued its slow grind lower vs. the Greenback hitting a one year low just above 0.7300 on the inter-bank market. Where to from here for AUD/USD? Well that of course is the million dollar question and depending which bank or economist you speak with you could get any number of views. One scenario is that rising interest rates in the U.S will drag the USD higher as investors chase higher yielding U.S treasury bonds, while the other scenario suggests the AUD could be supported by higher commodities prices and a continually booming growth story in China and other emerging markets. My personal opinion is it's probably somewhere in-between and I'd not be surprised to see AUD/USD continue to trade through the low to high 0.70's, buying your USD on any rally and for exporters selling USD on any significant falls.

AUD/EUR and AUD/GBP are more or less unchanged from earlier in the week.

Ahead this evening is Final GDP which is tipped to come in at an annualised run rate of about 2.2%. This would be a bit behind the previous quarter in March where we saw 2.9% annualised growth.

AUD EXCHANGE RATES:

AUD/USD – 0.7340

AUD/GBP – 0.5593

AUD/EUR – 0.6348

AUD/NZD – 1.0793

AUD/JPY – 80.938

USD/BTC – $6,104

OTHER MARKETS: 

All Ords (XAO) – 6,290

Gold – A$1705/oz

Silver –  A$21.86/oz

WTI – US$71.84/barrel

DATA RELEASES TODAY:

USD – Final GDP q/q at 10.30pm

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Topics: Report, Market

Market Update - 26th June 2018 - AUD Declines With Equities As Risk Aversion Whips Up Yet Again

Posted by Patrick Downes on June 26, 2018 at 8:36 AM

I spoke too soon when I said we might be in for a good week on the back of more bullish commodities prices. Unfortunately that theme was exceptionally short lived and markets have again gone into 'risk-off' mode as trade tensions flare up yet again. Equities got particularly hammered with the NASDAQ down 2%, while in Europe the German DAX fell nearly 2.5%. We haven't seen those sorts of falls for a number of weeks. Locally the Aussie dollar is down against the EURO, GBP and USD, but holding up nicely versus the New Zealand Dollar or Kiwi.

Commodities prices were mixed overnight with Iron Ore which is used to make steel down marginally while Zinc which is used to galvanise that steel got smoked for an 8th day straight. Zinc prices have now fallen roughly 11% since the middle of June despite remaining in a supply deficit.

There is no local economic date out today, however U.S CB Consumer Confidence is released at midnight AEST. The figure is expected to remain elevated "at historically strong levels" and "should continue to support solid consumer spending in the near-term."

AUD EXCHANGE RATES:

AUD/USD – 0.7407

AUD/GBP – 0.5571

AUD/EUR – 0.6321

AUD/NZD – 1.0734

AUD/JPY – 81.350

USD/BTC – $6,236

OTHER MARKETS: 

All Ords (XAO) – 6,308

Gold – A$1707/oz

Silver –  A$22.04/oz

WTI – US$67.92/barrel

DATA RELEASES TODAY:

USD - CB Consumer Confidence at midnight

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Topics: Report, Market

Market Update - 25th June 2018 - Oil Prices Surge Despite Prodn Increase, AUD Higher With Commodities

Posted by Patrick Downes on June 25, 2018 at 8:39 AM

The Aussie dollar has made some good gains over the weekend managing to add about 1% vs. the Greenback while AUD/EUR and AUD/GBP made more modest gains. Equities generally moved higher with the exception of the NASDAQ which fell 0.26%. By contrast the rest of the U.S exchanges were up around 0.2%-0.7%, while European equities surged with the FTSE the best performer up nearly 1.7%. Commodities also performed well, led by iron ore and the base metals.

OPEC meetings held over the weekend caused oil prices to surge by as much as $3 a barrel despite a production increase which would ordinarily see oil prices decline. The reason? Well it could be shrinking production in Venezuela but also growing demand for oil around the world....the Financial Times sum it up best - "The uncertainties around these events, and continued instability in the Middle East, only fuels speculation and volatility. Don’t trust anyone who claims to be able to predict the price of oil."

No economic data out today, however Aussie equities are set to open higher following the lead from Europe and Wall St. The Aussie dollar is looking better so we could be in for a good week - famous last words?

AUD EXCHANGE RATES:

AUD/USD – 0.7437

AUD/GBP – 0.5604

AUD/EUR – 0.6374

AUD/NZD – 1.0752

AUD/JPY – 81.712

USD/BTC – $6,128

OTHER MARKETS: 

All Ords (XAO) – 6,322

Gold – A$1707/oz

Silver –  A$22.14/oz

WTI – US$68.18/barrel

DATA RELEASES TODAY:

No economic data

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Topics: Report, Market

Market Update - 22nd June 2018 - ASX200 Surpasses 2007 High & Bank Of England Inching Towards Rate Hike

Posted by Patrick Downes on June 22, 2018 at 8:54 AM

The Bank of England last night chose to keep interest rates on hold at 0.5%, which was no surprise and inline with predictions. However what's interesting is that in their voting system, which provides insight into who voted for what and why, showed a third member of the seven member board is now interested in a rate hike, one more than had been the case previous. Odds are therefore increasing that we could see a rate hike from the Bank of England sooner rather than later which should continue to support the GBP. AUD/GBP has been tracking lower over the month and is now around two cents off the high we saw in early June around 0.5750.

In other news U.S and European stock markets retreated with commodities. Our Aussie share market has however bucked that trend over the last few days with the ASX200 managing to finally surpass the 2007 high - it only took 11 years. Have a great weekend!

AUD EXCHANGE RATES:

AUD/USD – 0.7374

AUD/GBP – 0.5567

AUD/EUR – 0.6353

AUD/NZD – 1.0736

AUD/JPY – 81.048

USD/BTC – $6,680

OTHER MARKETS: 

All Ords (XAO) – 6,332

Gold – A$1718/oz

Silver –  A$22.15/oz

WTI – US$65.86/barrel

DATA RELEASES TODAY:

All - OPEC Meetings

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Topics: Report, Market

Market Update - 21st June 2018 - AUD/USD Declines Below 0.7400 For First Time Since June 2017

Posted by Patrick Downes on June 21, 2018 at 8:37 AM

As I suspected could be the case in Tuesday's morning report (Market-Update-19th-June-2018) the AUD has most certainly tested the 0.7400 handle breaking below for the first time in 2018, and hitting it's lowest point since June 2 2017. Trade war fears, higher U.S interest rates and general market weakness is the main culprit for the sell off in risk assets: which includes the AUD, Commodities & Equities. The chart of AUD/USD certainly looks ugly since the declines began in Feb, but I suppose the one positive is that commodities have rallied over night and growth in China and India continues unabated. Additionally this time last year when AUD/USD hit 0.7370 we went on a sustained rally to be trading back at 0.8000 by the end of July.

Moral of the story? The Aussie Dollar is notoriously difficult to forecast with any accuracy and your bet about the AUD's next move is probably as good as mine, as such the key thing for both importers and exporters is to always monitor those costing levels and be sure to hedge when the opportunity arises to lock in Forward Contracts and by default your profits.

AUD EXCHANGE RATES:

AUD/USD – 0.7366

AUD/GBP – 0.5589

AUD/EUR – 0.6363

AUD/NZD – 1.0734

AUD/JPY – 81.287

USD/BTC – $6,692

OTHER MARKETS: 

All Ords (XAO) – 6,274

Gold – A$1720/oz

Silver –  A$22.10/oz

WTI – US$65.37/barrel

DATA RELEASES TODAY:

GBP - Bank of England MPC Official Bank Rate Votes at 9.00pm

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Topics: Report, Market

Market Update - 19th June 2018 - Aussie Dollars Decline Accelerates As Markets Remain Jittery

Posted by Patrick Downes on June 19, 2018 at 8:32 AM

The Aussie dollars decline has continued unabated overnight as markets remain jittery following initial jabs in a trade war between China and the U.S and general weakness in commodities prices. AUD/USD looks set to test support at the 0.7400 level, while AUD/EUR which had been as high as 0.6546 is now looking quite weak in the mid to high 0.63's. AUD/GBP is holding just above 0.5600 but may well also succumb to further selling pressure if this mornings monetary policy meeting minutes from the RBA are more bearish that anticipated. Minutes from the last meeting will be released around 11.30am.

U.S and European equities sold off again overnight with European stocks faring the worst, down as much as 1.4% in Germany. Commodities as mentioned above also performed poorly Zinc, Nickel and Copper all lower overnight, oil moved higher marginally.

Data out today includes monetary policy minutes at 11.30am, followed by a speech from ECB President Draghi and U.S Building Permits later tonight. The key data probably being the monetary policy minutes release. The RBA has been generally pretty bearish on their views of the Australian economy and are really struggling to see a reason to raise rates from a stubbornly low 1.5%. The RBA is concerned that higher rates could lead to a swifter decline in property prices so they are preferring to wait until wages growth picks up as that could offset the impact of any further decline in property prices and of course allow indebted property investors the ability to pay off the larger associated mortgage repayments.

AUD EXCHANGE RATES:

AUD/USD – 0.7421

AUD/GBP – 0.5601

AUD/EUR – 0.6375

AUD/NZD – 1.0702

AUD/JPY – 82.051

USD/BTC – $6,697

OTHER MARKETS: 

All Ords (XAO) – 6,212

Gold – A$1723/oz

Silver –  A$22.22/oz

WTI – US$65.67/barrel

DATA RELEASES TODAY:

AUD - Monetary Policy Meeting Minutes from the RBA at 11.30am

EUR - ECB President Draghi Speaks at 6.00pm

USD - Building Permits at 10.30pm

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Topics: Report, Market

Market Update - 18th June 2018 - Trump Escalates Trade War With China, Commodities & AUD Lower As A Result

Posted by Patrick Downes on June 18, 2018 at 8:20 AM

It's a bank holiday in China today, which means all payments received over the weekend bound for China will be released tomorrow. As such please allow an extra day for payments to be received by your suppliers.

Commodities, stocks and the Aussie Dollar all finished the week in the red with Trump escalating an unwinnable trade war with China. Understandable retaliatory tariffs by China on U.S exports to the tune of about $34 billion rattled markets and saw equities in the U.S off by about 0.2%-0.3%, while Europe fared far worse with the FTSE down as much as 1.7%. Commodities markets also got hit which in turn put a substantial dampener on the Aussie dollars recent good form.

AUD/USD is trading in the low 0.74's and may well retrace below this level if Trump continues his current path, while AUD/EUR and AUD/GBP have both lost considerable ground over the weekend and start the week at 0.6417 and 0.5604 respectively.

AUD EXCHANGE RATES:

AUD/USD – 0.7441

AUD/GBP – 0.5605

AUD/EUR – 0.6417

AUD/NZD – 1.0725

AUD/JPY – 82.330

USD/BTC – $6,470

OTHER MARKETS: 

All Ords (XAO) – 6,104

Gold – A$1719/oz

Silver –  A$22.26/oz

WTI – US$64.18/barrel

DATA RELEASES TODAY:

No economic data today + Bank Holiday in China

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Topics: Report, Market

Market Update - 15th June 2018 - U.S Retail Sales Surprise To The Upside, USD Surges Sending AUD/USD Lower

Posted by Patrick Downes on June 15, 2018 at 8:36 AM

U.S retail sales came in far better than expected overnight, doubling estimates at 0.8% and surprising economists and traders alike with figures not seen since December of last year. The very bullish and perhaps surprising retail sales pickup provided a boost for the US Dollar helping the US Dollar Index surge to a 7 month higher following the biggest single day move since November 2016. Unfortunately that also means a quite substantial drop in AUD/USD which had been looking quite healthy in the mid 0.75's but is now back in the lower part of a bi-monthly range in the mid 0.74's.

The U.S Federal Reserve also lifted rates on Thursday morning whilst telegraphing at least two more rate hikes before the end of the year. All of this along with slightly weaker commodities prices has been dragging on the Aussie dollar over the past 24 hours.

For those following AUD/EUR and AUD/GBP: The Aussie dollar has had a good run against both over the past two months, however more recently we've see a reversion to the mean and selling which has brought both AUD/EUR and AUD/GBP off these two month highs. AUD/GBP in the low 0.56's and AUD/EUR in the mid 0.64's remains pretty good levels considering we had got to as low as 0.5412 and 0.6190 for AUD/GBP and AUD/EUR respectively in the past month or so.

AUD EXCHANGE RATES:

AUD/USD – 0.7474

AUD/GBP – 0.5632

AUD/EUR – 0.6455

AUD/NZD – 1.0724

AUD/JPY – 82.702

USD/BTC – $6,618

OTHER MARKETS: 

All Ords (XAO) – 6,129

Gold – A$1742/oz

Silver –  A$22.99/oz

WTI – US$66.81/barrel

DATA RELEASES TODAY:

USD - Prelim UoM Consumer Sentiment at midnight

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Topics: Report, Market

Market Update - 13th June 2018 - AUD Little Changed Over The Month, Equities Lower

Posted by Patrick Downes on June 13, 2018 at 9:32 AM

Queens Birthday Monday and a Pies win in the AFL, makes me a very happy FX Dealer. Also the fact I had an extra long weekend certainly helps add some cheer.

No morning reports from me last week, so apologies about that, but the truth is the Aussie dollar has done bugger all over the past month or so. Earlier this month we hit a high of 0.7677 vs. the Greenback while the recent low was 0.7465 in early May. So between that high and low you're talking about 300 points or a roughly 4% range, minuscule considering AUD/USD has been known in the past to move as much as one or even two percent in a day. AUD/USD has been trending higher during this period but the more long range trend going back to Feb suggests we are still in a cyclical downtrend.

On the markets front, U.S and European equities moved generally lower with the exception being the S&P500 up 0.17% and the NASDAQ which bucked the trend and was up 0.57% at the close. Commodities markets generally moved lower, with Iron ore and Uranium prices dropping the most. Uranium is becoming an important metal to watch with those who have an interest in commodities. Uranium is an obvious source of clean base load power and looks set for a revival thanks to the electric vehicle revolution. Additionally the demand/supply setup looks terrific for a sustained bull run when one starts.

Ahead tonight is the FOMC Statement and Federal Reserve interest rate decision - expectations are that a well choreographed 25 basis point increase to 2.00% is on the cards - as such we're probably not likely to see too much volatility on the part of the rate increase, but more so on the attached rhetoric and commentary on further rate increase - watch this space.

AUD EXCHANGE RATES:

AUD/USD – 0.7569

AUD/GBP – 0.5661

AUD/EUR – 0.6443

AUD/NZD – 1.0810

AUD/JPY – 82.606

USD/BTC – $6,499

OTHER MARKETS: 

All Ords (XAO) – 6,042

Gold – A$1711/oz

Silver –  A$22.26/oz

WTI – US$65.76/barrel

DATA RELEASES TODAY:

AUD - RBA Gov Lowe Speaks at 12.00pm

USD - Fed Funds Rate & FOMC Statement at 4.00am

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Topics: Report, Market

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