Compass Global Markets' Blog

Market Update - 2nd October 2019 - AUD Falls As RBA Cuts & Manufacturing Numbers Paint Bleak Picture

Posted by Patrick Downes on October 2, 2019 at 8:47 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.

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. 

RBA Cut:

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

OTHER MARKETS:

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

Sign up for a Compass account today and access some of the most competitive rates in the business and arguably the best service.

 

Open Account 

Patrick's Signature-802090-edited.jpg

Patrick Downes

Senior Corporate FX Dealer

Phone Patrick - 0431 278 632 

  Email Patrick: patrick@compassmarkets.com

CompassFB-1

 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.
This report is provided for Australian residents only and is not intended for use by residents of any other country.

Topics: Report, Market

Compass Global Markets' Blog

Subscribe to Email Updates

Recent Posts