Compass Global Markets' Blog

Market Update - 30th October 2019 - AUD Gains, Brits Head Back To Polls, CPI & U.S Jobs Numbers Due

Posted by Patrick Downes on October 30, 2019 at 9:21 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 Gains & Brexit Update:

We're up again overnight with the Aussie Dollar adding around half a percent right across the board as RBA Governor Lowe (in a speech at The Australian National University, in Canberra) hosed down any chance of seeing negative interest rates in Australia.

The best performer though was AUD/GBP which is up nearly 1% as the British Parliament passed overnight a bill that will send Brits back to the polling booths in December to cast a definitive vote on Brexit. This could go either way, but you'd have to think we're now in the final legs of a Brexit outcome here, as such expect more GBP volatility leading up to December 12th.

Local CPI: 

We have another big 24 hours of economic data which kicks off at 11.30am with local CPI numbers. Forecasts are that we'll see 0.5% growth in quarterly CPI, which would be below last quarter and on trend with the exceptionally low inflation we've seen over the past 5 years.

We then get U.S preliminary jobs numbers other wise known as ADP Non-Farm Employment Change at 11.15pm. This is closely followed by U.S GDP numbers and then the U.S Fed Interest Rate decision at 5.00am tomorrow morning. Volatility will be up and about, so those clients happy with current AUD rates and wishing to avoid a lower or higher AUD tomorrow would be best suited to book payments and FX deals before 11.30am this morning.

AUD EXCHANGE RATES:

AUD/USD – 0.6831

AUD/GBP – 0.5300

AUD/EUR – 0.6143

AUD/NZD – 1.0760

AUD/JPY – 74.400

OTHER MARKETS:

All Ords (XAO) – 6,848

Gold – A$2,167/oz

Silver –  A$25.94/oz

WTI – US$55.51 barrel

DATA RELEASES TODAY:

AUD – CPI q/q at 11.30am

USD - ADP Non-Farm Employment Change at 11.15pm

USD - Advance GDP q/q at 11.30pm

USD - FOMC Statement and Federal Funds Rate at 5.00am

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Topics: Report, Market

Market Update - 29th October 2019 - AUD Makes Gains With Equities & Commodities

Posted by Patrick Downes on October 29, 2019 at 8:22 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.

Stocks Mostly Gain: 

The AUD has edged higher since Friday morning with the best performer being AUD/EUR which is up around 30 points or half a percent. AUD/USD made most of it's gains on Friday afternoon so is little changed since the Saturday morning close (the normal time FX markets close for trade before reopening on the Monday morning).

CPI Tomorrow: 

We had no economic data out yesterday and that void continues today and tonight, but things ratchet up again with the release of Australian quarterly CPI figures at 11.30am tomorrow morning. Expectations are for further flat CPI growth in the range of 0.5%, suggesting CPI is still moving rather sluggishly at 2% per annum or at the very bottom of the RBA's range. A particularly poor reading tomorrow and we will likely see the AUD fall on expectations of further rate cuts from the RBA down the track.

Overnight stocks gained right across the board which should mean a good day again for local equities. Futures are suggesting a gain of 0.3% on the open. RBA Gov Lowe speaks tonight at 5.45pm which could impact the AUD's movements.

AUD EXCHANGE RATES:

AUD/USD – 0.6803

AUD/GBP – 0.5281

AUD/EUR – 0.6130

AUD/NZD – 1.0737

AUD/JPY – 74.188

OTHER MARKETS:

All Ords (XAO) – 6,842

Gold – A$2,182/oz

Silver –  A$26.11/oz

WTI – US$55.75 barrel

DATA RELEASES TODAY:

AUD - RBA Gov Lowe Speaks at 5.45pm

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Topics: Report, Market

Market Update - 25th October 2019 - Stocks Gain While AUD Drifts

Posted by Patrick Downes on October 25, 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.

Stocks Mostly Gain: 

U.S stocks mostly gained overnight led by the tech sector's NASDAQ which added close to 1%. The S&P 500 closed 0.19% higher, while the Dow bucked the trend finishing in the red. In Europe stock indices added between half and one percent as economic data came in mixed; French manufacturing and services PMI climbed, while the equivalent data in Germany fell. Interest rates in Europe have been stuck at 0.00% for nearly four years now and the data suggests a few more years of stagnant growth and inflation may keep rates at record lows for much longer. The local ASX is set to open around half a percent higher this morning.

AUD Drifts:

Turning to Australia and the local market had a good session yesterday, while the Aussie Dollar lost some of the gains made in the latter part of last week. AUD/USD has actually had a really good run through October, gaining over 200 points before encountering some selling pressure this week. For the most part we remain in a downtrend which has been in place since early 2018, but if we can break 0.6900 on the charts it may indicate some bullish momentum. Whether we're in a new trend after that will depend on a lot of things including the equities market, the local economy, Brexit and a trade deal between Trump and China.

No economic data is due out today. Have a great weekend.

AUD EXCHANGE RATES:

AUD/USD – 0.6786

AUD/GBP – 0.5270

AUD/EUR – 0.6106

AUD/NZD – 1.0647

AUD/JPY – 73.745

OTHER MARKETS:

All Ords (XAO) – 6,796

Gold – A$2,204/oz

Silver –  A$26.10/oz

WTI – US$56.07 barrel

DATA RELEASES TODAY:

No data.

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Topics: Report, Market

Market Update - 23rd October 2019 - AUD Edges Higher Over The Week & Brexit Delayed Again

Posted by Patrick Downes on October 23, 2019 at 8:55 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 Moves Higher: 

The AUD is up since my Monday report having gained around half a percent through Monday while moderating some of those gains yesterday. AUD/USD is this morning, near the highest level since mid September after reaching a low in the 0.66's. Is this the start of a new cycle, perhaps a period of relative AUD strength? Probably not, but it all boils down to our local economy, growth, inflation and the RBA. Should we see further cuts from the RBA (to stimulate our economy) then the AUD will remain on the back-foot, whilst on the other hand if we see an improving economy and the RBA cease rate cuts, then perhaps the AUD will begin to rally. The key message though, is risk management and hedging remain an imperative tool for importers in this stage of the cycle.

Brexit: 

A quick Brexit update and what we see is further delays following two keys votes overnight, one saw the EU support the latest Brexit plans, while in the UK another vote saw members of parliament reject a fast-track Brexit law. This means more to-ing and fro-ing and a new date for Brexit of January 31st 2020. The original Brexit vote was held in mid 2016, or roughly 3 and a half years ago. Not surprisingly the GBP fell sending the AUD/GBP cross higher this morning.

No economic data is released today, however RBA Assistant Governor Kent speaks this morning around 9.30am. Our local market is set to open lower this morning following a weak lead from overseas equities market and another failed Brexit vote.

AUD EXCHANGE RATES:

AUD/USD – 0.6831

AUD/GBP – 0.5290

AUD/EUR – 0.6138

AUD/NZD – 1.0671

AUD/JPY – 74.012

OTHER MARKETS:

All Ords (XAO) – 6,778

Gold – A$2,170/oz

Silver –  A$25.56/oz

WTI – US$54.31 barrel

DATA RELEASES TODAY:

AUD - RBA Assist Gov Kent Speaks at 9.20am

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Topics: Report, Market

Market Update - 21st October 2019 - AUD Makes Gains, While Brexit And Trade Deal Negotiations Continue

Posted by Patrick Downes on October 21, 2019 at 8:14 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 Gains: 

The AUD gained through Thursday, Friday and the weekend managing to move above 0.6800 vs. the Greenback while wrestling back some lost ground vs. the Pound, Euro and Japanese Yen. The reason for the moves can be traced back to the Unemployment Rate and Employment numbers which were released Thursday morning and showed a surprise down tick in the unemployment rate to 5.2% along with around 15,000 new jobs. The better jobs numbers locally coincided with poorer U.S economic data which suggests further rates cuts from the U.S Fed are likely. As it stands the official cash rate in Australia is 0.75%, while the U.S still leads the pack with a Fed Funds Rate of 2.00%.

Equities Lower, Brexit/Trade Deal:

No economic data is released today, however stock markets in Europe and the U.S ended the week on a negative note with the Dow the worst performer down 0.95%, while in Europe the French CAC led falls, down 0.65%. Our local market is set to open pretty flat, however things could change dramatically once we get some early news flow this morning. Major stories and market movers continue to be the U.S/China trade deal along with Brexit shenanigans.

AUD EXCHANGE RATES:

AUD/USD – 0.6814

AUD/GBP – 0.5250

AUD/EUR – 0.6100

AUD/NZD – 1.0687

AUD/JPY – 73.878

OTHER MARKETS:

All Ords (XAO) – 6,758

Gold – A$2,174/oz

Silver –  A$25.60/oz

WTI – US$53.77 barrel

DATA RELEASES TODAY:

No data.

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Topics: Report, Market

Market Update - 17th October 2019 - AUD Falls Vs. Pound, But Equities Looking Strong

Posted by Patrick Downes on October 17, 2019 at 9:16 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 Vs. Pound: 

No report from me yesterday, but the AUD has retreated since Tuesday, falling around half a percent vs. the Greenback but more significantly around 2% vs. the British Pound as a Brexit deal inches closer. The latest on Brexit suggests a deal that would allow Britain to leave the European Union without too many concessions is "tantalisingly close". Negotiations on the last portion of the deal, how to treat Northern Ireland in a post-Brexit Europe, remains the most divisive issue and something likely to require further discussions. In the meantime, the British Pound could continue to make gains vs. the AUD after a long period of declines that began way back in the middle of 2015 when AUD/GBP was trading around 0.4500. We will continue to monitor this.

Aussie Employment: 

Local employment data is due out this morning at 11.30am with the latest estimates suggesting no change to the unemployment rate around 5.3% and 15,000 new jobs created. After reaching a low of 4.9% in March the unemployment rate has been steadily rising despite positive jobs growth. The problem though and the reason for the rise in the unemployment number appears to be this switch to the 'gig' economy and part-time positions, which has become far more prevalent over the the past few years. Lower interest rates should continue to support jobs growth 'in theory' however recent history suggests low interest rates are not having the same impact as they did in the past and this could be due to the extremely low level of interest rates across the globe.

AUD EXCHANGE RATES:

AUD/USD – 0.6723

AUD/GBP – 0.5238

AUD/EUR – 0.6070

AUD/NZD – 1.0712

AUD/JPY – 73.140

OTHER MARKETS:

All Ords (XAO) – 6,843

Gold – A$2,204/oz

Silver –  A$25.74/oz

WTI – US$53.04 barrel

DATA RELEASES TODAY:

AUD – Employment Change & Unemployment Rate at 11.30am

GBP – Retail Sales m/m at 7.30pm

USD - Philly Fed Manufacturing Index at 11.30pm

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Topics: Report, Market

Market Update - 15th October 2019 - AUD Drifts On Waning Trade Optimism

Posted by Patrick Downes on October 15, 2019 at 8:48 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 Drifts:

The AUD has drifted marginally lower over the past 24 hours - a result of waning optimism about a proposed trade deal between China and the U.S in which China is said to have agreed to increase it's "purchases of US farm products" among other things. Stock markets also dipped, but again not by much with the biggest loser being the S&P 500 which lost only 0.14%. Our local market is set to open around 0.3% lower today after a strong day yesterday.

Protests Globally:

On the geopolitical front and while protests in France have receded recently, far reaching protests continue to flair in Hong Kong and more recently Ecuador where we have seen massive protests against austerity measures and a scrapping of fuel subsidies. The clashes certainly give us all a bit of perspective on how lucky we are to live in a very stable economic environment like that in Australia. And also how lucky we are to have a reasonably stable local currency in the AUD.

RBA Minutes Due: 

Minutes from the latest RBA meeting are due at 11.30am this morning and should give us some more insight into the reasoning behind the RBA's second rate cut in four months. Expectations are that stagnant wage growth and continued sluggish retail spending is behind the reasoning to cut rates. How much further the RBA cut rates remain to be seen but we will certainly get more clarity as to whether or not more cuts are in the pipeline with these latest minutes.

AUD EXCHANGE RATES:

AUD/USD – 0.6744

AUD/GBP – 0.5331

AUD/EUR – 0.6115

AUD/NZD – 1.0727

AUD/JPY – 73.140

OTHER MARKETS:

All Ords (XAO) – 6,757

Gold – A$2,203/oz

Silver –  A$26.06/oz

WTI – US$53.51 barrel

DATA RELEASES TODAY:

AUD - Monetary Policy Meeting Minutes at 11.30am

GBP - BOE Gov Carney Speaks at 7.30pm

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Topics: Report, Market

Market Update - 14th October 2019 - Investor Sentiment Improved Friday On The Back Of Positive Trade Talks

Posted by Patrick Downes on October 14, 2019 at 8:20 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.

Investor Sentiment Improves:

Equities closed out the week in better shape with the major equity indices in the U.S and Europe adding as much as 2.86% in Europe (Dax) and 1.34% in the U.S (Nasdaq). The solid gains came amid renewed hope that a trade deal and progress is still possible in the now 22 month long trade war between China and Trump's White House administration. Locally, and the ASX is tipped to open strongly this morning.

AUD Gains:

The broadly stronger investor sentiment on Friday helped the AUD make gains right across the board with AUD/USD the best performer up around 1% on Friday evening. AUD/GBP was the only currency pair to pare gains as the British Pound made gained on positive Brexit negotiations.

Bank Holidays: 

No economic data is due out today, but we have bank holidays in the US, Japan and Canada today meaning USD, JPY and CAD payments will all go out tomorrow.

AUD EXCHANGE RATES:

AUD/USD – 0.6756

AUD/GBP – 0.5337

AUD/EUR – 0.6117

AUD/NZD – 1.0681

AUD/JPY – 73.233

OTHER MARKETS:

All Ords (XAO) – 6,721

Gold – A$2,192/oz

Silver –  A$25.84/oz

WTI – US$54.90 barrel

DATA RELEASES TODAY:

No data.

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Topics: Report, Market

Market Update - 9th October 2019 - AUD Under Pressure As U.S Slaps Travel Bans On Chinese Officials

Posted by Patrick Downes on October 9, 2019 at 9:07 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.

Investor Sentiment Cops Hit:

The Aussie Dollar had a mixed session overnight falling against the Greenback and Yen, but gaining vs. the Euro and GBP, following another flare up of trade tensions and weak investor sentiment. Equities had a particularly bad session with almost all major European and U.S indices losing over 1% following reports that the U.S intend to slap  bans on Chinese officials and companies tied to the re-education camps in Xinjiang Province. Our local market is set for a poor start with the ASX200 Futures suggesting as much as a 1% loss on the open.

Fed Chair Speaks: 

In other news, we saw yet another speech from Fed Chairman Jerome Powell who has been speaking almost daily recently. Depending on whether you're a bull or a bear on the U.S economy there was something for everyone as Powell noted that he doesn't see why expansion can't continue, while in the same breath noting the Fed will continue to provide accommodating monetary policies to help stimulate expansion. Powell speaks again tonight along with the release of the latest FOMC Meeting Minutes at 5.00am tomorrow morning, so expect yet more volatility for particularity equities.

Westpac Consumer Sentiment: 

Consumer sentiment data is released this morning at 10.30am and with the AUD under pressure this morning we could be set for further declines if consumer sentiment is particularly poor. The data has been choppy lately, gaining one month only to lose those gains the following - therefore trying to predict consumer sentiment continues to be a frivolous pursuit. The AUD is barely holding on to 0.6700's at the moment and looks set to continue to test previous lows around 0.6670.

AUD EXCHANGE RATES:

AUD/USD – 0.6697

AUD/GBP – 0.5472

AUD/EUR – 0.6109

AUD/NZD – 1.0654

AUD/JPY – 71.725

OTHER MARKETS:

All Ords (XAO) – 6,713

Gold – A$2,237/oz

Silver –  A$26.34/oz

WTI – US$52.53 barrel

DATA RELEASES TODAY:

AUD - Westpac Consumer Sentiment at 10.30am

EUR - Eurogroup Meetings

USD - FOMC Meeting Minutes at 5.00am (tomorrow morning)

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Topics: Report, Market

Market Update - 8th October 2019 - AUD Still Trading In A Tight Range

Posted by Patrick Downes on October 8, 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.

Bank Holiday Yesterday:

It was a bank holiday right across Australia yesterday, as such all cleared payments over the long weekend will go out first thing this morning.

Overnight in the Northern Hemisphere, U.S and European stock markets opened the week mixed with U.S indices led lower by the S&P 500 which fell 0.45%, while in Europe indices were led higher by the Euro Stoxx 50 and German Dax which gained around 0.70%. Despite the mixed signals our local market looks set to open around 0.35% higher at 10.00am.

What's The AUD Doing? 

Really we've just seen a continuation of light volatility in a tight range for the AUD. In fact AUD/USD has in the past two months traded between around 0.6670 and 0.6890 - 220 points is an unusually tight trading range and it's unlikely to last forever . With the RBA having a bias to cut interest rates unfortunately the reality remains that lower lows are more likely than higher highs. As such importers should be aware and ready to act on any increases in the value of the AUD.

U.S Fed: 

U.S Fed Chair Jerome Powell has another speech tonight, the market has tended to move on his speeches so expect more of the same early tomorrow morning. Topics of discussion will again be interest rates, the economy and the impacts of the never ending trade war with China.

AUD EXCHANGE RATES:

AUD/USD – 0.6700

AUD/GBP – 0.5442

AUD/EUR – 0.6103

AUD/NZD – 1.0669

AUD/JPY – 71.900

OTHER MARKETS:

All Ords (XAO) – 6,686

Gold – A$2,218/oz

Silver –  A$25.90/oz

WTI – US$52.75 barrel

DATA RELEASES TODAY:

USD – Fed Chair Powell Speaks at 4.50am (tomorrow morning)

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Topics: Report, Market

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