Compass Global Markets' Blog

Market Update - 4th May 2020 - Volatility Returns To Equities But AUD Still Looking Solid

Posted by Patrick Downes on May 4, 2020 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.

Stock Market Volatility Returns:

Volatility appears to be back with both local and international equities surging forward by as much as 5% during Thursday trade only to have almost all those gains given back during their respective Friday sessions. Further falls are likely today with local ASX futures opening down 2.13% (as I write) while U.S Dow and S&P 500 futures are down 1.5% at this moment. Warren Buffett's sale of all his U.S airline positions sends an ominous warning that perhaps the worst is still yet to come and it's probably why futures are off so much this morning. Throw into that the potential for a new trade war between the U.S and China and it's not hard to see why this week could be shocker. U.S Secretary of State Mike Pompeo also claimed in a Sunday interview that there is “enormous evidence” the Covid19 virus originated in a Chinese lab, without providing any evidence. This is sure to infuriate China and may result in some form of retaliation.

AUD Comes Off Highs:

The AUD has performed exceptionally well recently, hitting two and three month high's vs. the Greenback and Euro & GBP. However the recent equities sell off has seen some profit taking and a lower AUD over the past couple of sessions. All in all though it would appear cyclical lows are in for the AUD and some consolidation around current levels are likely. Consolidation could mean AUD/USD travels back towards 0.6000 or as high as 0.7000 in the short to medium term.

Final Say:

As such Importers should look to take advantage of AUD rallies and purchase currency as needed. Exporters: it would appear the tide has turned and any dip should be seen as an opportunity to take cover or convert currency back to AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.6361

AUD/GBP – 0.5095

AUD/EUR – 0.5802

AUD/NZD – 1.0557

AUD/JPY – 68.032

OTHER MARKETS:

All Ords (XAO) – 5,325

Gold – A$2,656/oz

Silver –  A$23.32/oz

Oil – US$20.09 barrel

DATA RELEASES TODAY:

EUR - EU Economic Forecasts

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

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