Compass Global Markets' Blog

Market Update - 11th February 2020 - AUD Gains Alongside U.S Equities, NAB Business Confidence Due

Posted by Patrick Downes on February 11, 2020 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.

AUD Gains:

The AUD has made modest gains of around half a percent since this time yesterday morning, following the lead of U.S equities which added between 0.3% and 1.1%. We didn't have any data out yesterday or any real change in the coronavirus story so I guess the move could be simply down to regular market gyrations. Unfortunately though AUD/USD still remains at 10 year lows while AUD/GBP and AUD/EUR are closer to 5 year lows.

It's a tough time for importers at the moment, so the best bet is still to hedge longer dated imports particularly where margins are tight.

Example:

If you've agreed to an import, but payment is not due for three months and your costing rate is set at 0.6400 then you could essentially book a Forward Contract in today above 0.6400, locking in your margins and you do not need to pay a cent until payment is due in 3 months.

The alternative is you do nothing and spot in 3 months could be below 0.6400 and you're now importing at a loss.

NAB Business Confidence Due:

NAB Business confidence numbers are due out today along with UK GDP figures tonight. Today's business confidence reading will be the first reading since coronavirus and also the first to take in the full impact of the bush fires. There is no forecast for business confidence, however it's been in decline since the start of 2018 and actually went negative in January for the first time since 2013. I'd be expecting a negative reading again today which could be a drag on the AUD.

As such, payments due this week, may be best made before 11.30am.

AUD EXCHANGE RATES:

AUD/USD – 0.6654

AUD/GBP – 0.5143

AUD/EUR – 0.6095

AUD/NZD – 1.0440

AUD/JPY – 73.071

OTHER MARKETS:

All Ords (XAO) – 7,108

Gold – A$2,350/oz

Silver –  A$26.57/oz

WTI – US$49.79 barrel

DATA RELEASES TODAY:

AUD - NAB Business Confidence at 11.30am

GBP - Prelim GDP q/q at 8.30pm

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick - 0431 278 632 

  Email Patrick: patrick@compassmarkets.com

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 DISCLOSURE AND DISCLAIMER - GENERAL ADVICE WARNING
The information provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should consider whether our products are appropriate for you and read the FSG and PDS which are available on this website.
This report and must not be copied, either in whole or in part, or distributed to any other person.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
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