Compass Global Markets' Blog

Market Update - 4th December 2019 - AUD Rally's Against Backdrop Of Declining Equities

Posted by Patrick Downes on December 4, 2019 at 9:28 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.

Something Unusual:

Something interesting has happened the past two days and it's not easily explainable. What we've seen over the past 48 hours is the Aussie Dollar rally along with Gold just as equity markets and commodities have sold off following a re-emergence of trade concerns and anxious investors. The reason it's unusual and not easily explained is because typically during an equity sell off, we'll see the AUD also fall, given it's moniker as a 'risk asset'. In fact AUD/USD is up some 100 points or 1.5% while equity markets have fallen over 3% the last couple of days.

Equities Lower: 

The local market is set to fall again today by around 1%, following declines of between half and 1 percent in the U.S and Europe overnight. The rally yesterday in the AUD may be as a result of the RBA cash rate decision yesterday afternoon to hold rates, however comments like "the Board is prepared to ease monetary policy further if needed" perhaps goes against this. Anyhow, markets are trading quite unusually at the moment and risks and volatility have certainly not dissipated - I don't think they ever really do.

GDP Due: 

Local GDP figures are due out at 11.30am and the market is tipping quarterly GDP around half a percent or two percent annualised. It's been well documented that GDP growth is flat/stagnant hence the recent cuts to interest rates, but we may well see a further catalyst for an AUD rally if GDP surprises to the upside.

AUD EXCHANGE RATES:

AUD/USD – 0.6815

AUD/GBP – 0.5236

AUD/EUR – 0.6146

AUD/NZD – 1.0469

AUD/JPY – 74.057

OTHER MARKETS:

All Ords (XAO) – 6,818

Gold – A$2,157/oz

Silver –  A$25.08/oz

WTI – US$56.25 barrel

DATA RELEASES TODAY:

AUD – GDP q/q at 11.30am

USD - ADP Non-Farm Employment Change at 12.15am

USD - ISM Non-Manufacturing PMI at 2.00am

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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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