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.
Busy 24 Hours:
In a pretty wild 24 hours, we've seen the AUD drop close to a percent on the back of an RBA rate cut yesterday afternoon, while in the U.S and Europe equities have fallen between 1 and 1.5% as manufacturing PMI numbers all across Europe and the U.S flashed warning signs about an impending recession.
I'll start with the RBA where Lowe chose yet again to cut interest rates by 25 basis points yesterday afternoon. The cut is a bid to get ahead of further economic weakness as a result of Donald Trump's protracted, and anticipated to continue, trade war with China. The trade war, as described in the comments from the RBA appears to be the biggest geo-political risk facing the global economy and by default also Australia's economy who experts the worlds commodities. The AUD as a result fell immediately on the cut and fell 1% vs. the Greenback and a similar amount vs. the Euro, JPY and GBP.
Global PMI Numbers:
Last nights data releases were all about manufacturing PMI numbers and the results paint a pretty bleak picture and for the bears it paints a picture they've been talking about for quite a while - recession. Manufacturing PMI is now almost across developed nations in the 40's, which means technically the whole of Europe, Japan and the U.S are in a manufacturing recession. Below 50 is contraction, above 50 is expansion. There have been times in the past where this PMI number has dropped below 50 and quickly retraced, however it can also be a solid warning of tougher times ahead. Hence why we saw U.S and European equities fall last night. The trump card is still Trump and the U.S Fed, who may choose to get stimulus pumping again, but I guess time will tell. And the moment though, caution is advised.
AUD EXCHANGE RATES:
AUD/USD – 0.6670
AUD/GBP – 0.5420
AUD/EUR – 0.6099
AUD/NZD – 1.0702
AUD/JPY – 71.908
All Ords (XAO) – 6,853
Gold – A$2,208/oz
Silver – A$25.76/oz
WTI – US$53.90/barrel
DATA RELEASES TODAY:
USD – ADP Non-Farm Employment Change at 10.15pm
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Senior Corporate FX Dealer
Phone Patrick - 0431 278 632
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