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Patrick Downes

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Market Update - 15th October 2019 - AUD Drifts On Waning Trade Optimism

Posted by Patrick Downes on October 15, 2019 at 8:48 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 Drifts:

The AUD has drifted marginally lower over the past 24 hours - a result of waning optimism about a proposed trade deal between China and the U.S in which China is said to have agreed to increase it's "purchases of US farm products" among other things. Stock markets also dipped, but again not by much with the biggest loser being the S&P 500 which lost only 0.14%. Our local market is set to open around 0.3% lower today after a strong day yesterday.

Protests Globally:

On the geopolitical front and while protests in France have receded recently, far reaching protests continue to flair in Hong Kong and more recently Ecuador where we have seen massive protests against austerity measures and a scrapping of fuel subsidies. The clashes certainly give us all a bit of perspective on how lucky we are to live in a very stable economic environment like that in Australia. And also how lucky we are to have a reasonably stable local currency in the AUD.

RBA Minutes Due: 

Minutes from the latest RBA meeting are due at 11.30am this morning and should give us some more insight into the reasoning behind the RBA's second rate cut in four months. Expectations are that stagnant wage growth and continued sluggish retail spending is behind the reasoning to cut rates. How much further the RBA cut rates remain to be seen but we will certainly get more clarity as to whether or not more cuts are in the pipeline with these latest minutes.

AUD EXCHANGE RATES:

AUD/USD – 0.6744

AUD/GBP – 0.5331

AUD/EUR – 0.6115

AUD/NZD – 1.0727

AUD/JPY – 73.140

OTHER MARKETS:

All Ords (XAO) – 6,757

Gold – A$2,203/oz

Silver –  A$26.06/oz

WTI – US$53.51 barrel

DATA RELEASES TODAY:

AUD - Monetary Policy Meeting Minutes at 11.30am

GBP - BOE Gov Carney Speaks at 7.30pm

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Topics: Report, Market

Market Update - 14th October 2019 - Investor Sentiment Improved Friday On The Back Of Positive Trade Talks

Posted by Patrick Downes on October 14, 2019 at 8:20 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.

Investor Sentiment Improves:

Equities closed out the week in better shape with the major equity indices in the U.S and Europe adding as much as 2.86% in Europe (Dax) and 1.34% in the U.S (Nasdaq). The solid gains came amid renewed hope that a trade deal and progress is still possible in the now 22 month long trade war between China and Trump's White House administration. Locally, and the ASX is tipped to open strongly this morning.

AUD Gains:

The broadly stronger investor sentiment on Friday helped the AUD make gains right across the board with AUD/USD the best performer up around 1% on Friday evening. AUD/GBP was the only currency pair to pare gains as the British Pound made gained on positive Brexit negotiations.

Bank Holidays: 

No economic data is due out today, but we have bank holidays in the US, Japan and Canada today meaning USD, JPY and CAD payments will all go out tomorrow.

AUD EXCHANGE RATES:

AUD/USD – 0.6756

AUD/GBP – 0.5337

AUD/EUR – 0.6117

AUD/NZD – 1.0681

AUD/JPY – 73.233

OTHER MARKETS:

All Ords (XAO) – 6,721

Gold – A$2,192/oz

Silver –  A$25.84/oz

WTI – US$54.90 barrel

DATA RELEASES TODAY:

No data.

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Topics: Report, Market

Market Update - 9th October 2019 - AUD Under Pressure As U.S Slaps Travel Bans On Chinese Officials

Posted by Patrick Downes on October 9, 2019 at 9:07 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.

Investor Sentiment Cops Hit:

The Aussie Dollar had a mixed session overnight falling against the Greenback and Yen, but gaining vs. the Euro and GBP, following another flare up of trade tensions and weak investor sentiment. Equities had a particularly bad session with almost all major European and U.S indices losing over 1% following reports that the U.S intend to slap  bans on Chinese officials and companies tied to the re-education camps in Xinjiang Province. Our local market is set for a poor start with the ASX200 Futures suggesting as much as a 1% loss on the open.

Fed Chair Speaks: 

In other news, we saw yet another speech from Fed Chairman Jerome Powell who has been speaking almost daily recently. Depending on whether you're a bull or a bear on the U.S economy there was something for everyone as Powell noted that he doesn't see why expansion can't continue, while in the same breath noting the Fed will continue to provide accommodating monetary policies to help stimulate expansion. Powell speaks again tonight along with the release of the latest FOMC Meeting Minutes at 5.00am tomorrow morning, so expect yet more volatility for particularity equities.

Westpac Consumer Sentiment: 

Consumer sentiment data is released this morning at 10.30am and with the AUD under pressure this morning we could be set for further declines if consumer sentiment is particularly poor. The data has been choppy lately, gaining one month only to lose those gains the following - therefore trying to predict consumer sentiment continues to be a frivolous pursuit. The AUD is barely holding on to 0.6700's at the moment and looks set to continue to test previous lows around 0.6670.

AUD EXCHANGE RATES:

AUD/USD – 0.6697

AUD/GBP – 0.5472

AUD/EUR – 0.6109

AUD/NZD – 1.0654

AUD/JPY – 71.725

OTHER MARKETS:

All Ords (XAO) – 6,713

Gold – A$2,237/oz

Silver –  A$26.34/oz

WTI – US$52.53 barrel

DATA RELEASES TODAY:

AUD - Westpac Consumer Sentiment at 10.30am

EUR - Eurogroup Meetings

USD - FOMC Meeting Minutes at 5.00am (tomorrow morning)

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Topics: Report, Market

Market Update - 8th October 2019 - AUD Still Trading In A Tight Range

Posted by Patrick Downes on October 8, 2019 at 8:33 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.

Bank Holiday Yesterday:

It was a bank holiday right across Australia yesterday, as such all cleared payments over the long weekend will go out first thing this morning.

Overnight in the Northern Hemisphere, U.S and European stock markets opened the week mixed with U.S indices led lower by the S&P 500 which fell 0.45%, while in Europe indices were led higher by the Euro Stoxx 50 and German Dax which gained around 0.70%. Despite the mixed signals our local market looks set to open around 0.35% higher at 10.00am.

What's The AUD Doing? 

Really we've just seen a continuation of light volatility in a tight range for the AUD. In fact AUD/USD has in the past two months traded between around 0.6670 and 0.6890 - 220 points is an unusually tight trading range and it's unlikely to last forever . With the RBA having a bias to cut interest rates unfortunately the reality remains that lower lows are more likely than higher highs. As such importers should be aware and ready to act on any increases in the value of the AUD.

U.S Fed: 

U.S Fed Chair Jerome Powell has another speech tonight, the market has tended to move on his speeches so expect more of the same early tomorrow morning. Topics of discussion will again be interest rates, the economy and the impacts of the never ending trade war with China.

AUD EXCHANGE RATES:

AUD/USD – 0.6700

AUD/GBP – 0.5442

AUD/EUR – 0.6103

AUD/NZD – 1.0669

AUD/JPY – 71.900

OTHER MARKETS:

All Ords (XAO) – 6,686

Gold – A$2,218/oz

Silver –  A$25.90/oz

WTI – US$52.75 barrel

DATA RELEASES TODAY:

USD – Fed Chair Powell Speaks at 4.50am (tomorrow morning)

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Topics: Report, Market

Market Update - 3rd October 2019 - Stocks Fall As Data Worries Investors, AUD Holding Ground

Posted by Patrick Downes on October 3, 2019 at 8:37 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.

Stocks Slammed:

The build up of negative sentiment this week has finally seen investors capitulate and they've done so in quite spectacular fashion. The biggest falls were seen on European Indices where markets lost between 2% and 3%, while the biggest loser was the U.K FTSE which lost 3.23% and continues to be whipsawed by Brexit uncertainty. Comparatively, U.S stocks fared OK, but still managed to lose upwards of 1.5%-1.9% - our local market looks set to follow this lead with Futures suggesting a fall of around 1.8% this morning.

AUD Stable: 

The AUD has held it's ground, not capitulating nor even really moving over the past 24 hours. In fact AUD/EUR and AUD/GBP are within 1 point of yesterday's morning report, while AUD/EUR has edged lower very marginally along with AUD/JPY and AUD/NZD. No economic data is released through today, however we do get U.S Non-Manufacturing PMI numbers around midnight and they could show further weakness in the U.S economy as manufacturing PMI did earlier in the week. This data presents risk more so to equities than the AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.6674

AUD/GBP – 0.5421

AUD/EUR – 0.6086

AUD/NZD – 1.0664

AUD/JPY – 71.555

OTHER MARKETS:

All Ords (XAO) – 6,753

Gold – A$2,236/oz

Silver –  A$26.22/oz

WTI – US$52.48 barrel

DATA RELEASES TODAY:

USD – ISM Non-Manufacturing PMI at midnight

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Topics: Report, Market

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

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Topics: Report, Market

Market Update - 1st October 2019 - AUD Stable Ahead Of October RBA Meeting & PRC Celebrates 70 Years

Posted by Patrick Downes on October 1, 2019 at 8:22 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 Stable:

Equities in Europe and the U.S mostly gained overnight while the Aussie Dollar remained unusually stable vs the other major currencies. All the AUD crosses are at or around the same levels as mid last week with little action on Thursday, Friday or yesterday. The next major market moving data announcement is today with the RBA Cash Rate decision at 2.30pm. Expectations are that we'll see another 25 basis point cut to interest rates however the market appears a little divided with around 20% of economists thinking the RBA might wait before cutting again - I tend to follow this line of thinking and think another rate cut is not a forgone conclusion this afternoon. If the RBA don't cut today, then you'd have to think AUD should bounce quite strongly, while a cut probably see's AUD/USD test the 0.66 level again.

Other than the RBA rate decision today we also have U.S ISM Manufacturing PMI due this evening around midnight AEST. This should show little change.

PRC Marks 70 Years:

Today, in China also marks 70 years of the PRC and it's a week long celebration over there, similar to the likes of Chinese New Year, where banks are not open and the vast majority of the working population goes on holidays to mark the special day. As a result expect payment delays.

AUD EXCHANGE RATES:

AUD/USD – 0.6720

AUD/GBP – 0.5458

AUD/EUR – 0.6163

AUD/NZD – 1.0752

AUD/JPY – 72.635

OTHER MARKETS:

All Ords (XAO) – 6,800

Gold – A$2,181/oz

Silver –  A$25.19/oz

WTI – US$54.17/barrel

DATA RELEASES TODAY:

AUD - RBA Rate Decision at 2.30pm

USD - ISM Manufacturing PMI at midnight

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Topics: Report, Market

Market Update - 25th September 2019 - AUD Boosted By RBA Comments, Equities Decline

Posted by Patrick Downes on September 25, 2019 at 8:36 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.

RBA Comments Boost Aussie:

The Aussie Dollar has rallied overnight following a speech from RBA Chief Philip Lowe at the Armidale Business Chamber in regional NSW. Mr Lowe outlined in detail the current local and global economic environment we find ourselves in but spent most of his time looking more at the domestic economy. Some comments were mildly bearish, while others were more bullish and it looks like the market has decided to focus on those more bullish comments and the fact he shied away from confirming any further cut to interest rates at the October meeting in two weeks.

In closing he also noted "looking forward, there are some signs that, after a soft patch, the economy has reached a gentle turning point. This is evident in the fact that GDP growth over the first half of this year was stronger than it was over the second half of last year. We are expecting a further modest pick-up in the quarters ahead."

Equities Fall: 

Equities fell overnight along with commodities prices contrasting the gains in the AUD. The NASDAQ was the worst performer down around 1.5%, while the other major U.S and European indices fell between 0.04% and 0.84%. Overall a risk off night for equities. Our local market looks set to open around 1% lower today.

There is no economic data out today.

AUD EXCHANGE RATES:

AUD/USD – 0.6768

AUD/GBP – 0.5410

AUD/EUR – 0.6138

AUD/NZD – 1.0722

AUD/JPY – 72.505

OTHER MARKETS:

All Ords (XAO) – 6,856

Gold – A$2,252/oz

Silver –  A$27.39/oz

WTI – US$56.81/barrel

DATA RELEASES TODAY:

None

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Topics: Report, Market

Market Update - 24th September 2019 - AUD Slides As Lowe Gets Set To Telegraph Next Rate Cut

Posted by Patrick Downes on September 24, 2019 at 8:43 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 Slides:

Weak investor sentiment on Friday night and through the weekend has pushed the AUD lower with the local currency down against all the major currencies. AUD/USD lost the most ground falling as much as 1% since Thursday afternoon. RBA Governor Lowe speaks this afternoon and is likely to start telegraphing a rate cut at the next RBA meeting on October 1st (two weeks from today). In fact the market is already pricing in an 80% chance of a rate cut on October 1st. The reason for the further cut to interest rates, which would take local interest below 1%, is simply persistent weak economic data right across the board.

Equities Flat:

U.S stocks finished the session flat, while European stocks lost as much as 1.00%, with the French CAC the worst performer down 1.05% at the close of trade.  Looking across markets more broadly and its interesting to note that the Shanghai/Shenzhen 300 and ASX 200 are the best performing markets in over the past year, up 14% and 9% respectively over the past 12 months. In contrast U.S equities are up a measly 1-2% over the same period.

As mentioned above RBA Governor Lowe speaks tonight around 8.00pm while U.S Consumer Confidence is due around midnight AEST.

AUD EXCHANGE RATES:

AUD/USD – 0.6745

AUD/GBP – 0.5416

AUD/EUR – 0.6131

AUD/NZD – 1.0733

AUD/JPY – 72.545

OTHER MARKETS:

All Ords (XAO) – 6,861

Gold – A$2,246/oz

Silver –  A$27.52/oz

WTI – US$58.28/barrel

DATA RELEASES TODAY:

AUD – RBA Gov Lowe Speaks at 7.55pm

USD - CB Consumer Confidence at midnight

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Topics: Report, Market

Market Update - 19th September 2019 - Fed Cuts Rates, ABS Employment Numbers Due At 11.30AM

Posted by Patrick Downes on September 19, 2019 at 9:12 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.

Fed Cuts: 

As widely expected the U.S Fed, led by Jerome Powell, chose to cut rates yet again bringing the official federal funds rate back to 2.00%. Fed Chair Powell noted that the reason for the cut in interest rates was to support the growth that is already occurring in the U.S economy and to help offset some of the impacts of Trump's trade war and accompanying investor uncertainty. In a few subtle jabs at Trump's policies, Powell also noted that the slowing growth "in exports and business investment" locally was due almost entirely to Trump's chosen trade policies.

The Aussie Dollar has fallen following the rate cut and is down right across the board. AUD/USD which has been stoic in the 0.68's lately is threatening to break lower, while AUD/EUR and AUD/GBP are also marginally lower.

Local Employment: 

The latest employment numbers and unemployment rate are due out this morning, followed by interest rate decisions in Japan and the U.K. However, the most important data is the ABS employment numbers due at 11.30am. The unemployment rate is tipped to remain unchanged at 5.2% while a little over 15,000 jobs are estimated to have been created last month. A bumper number or poor result could have a meaningful impact on the Aussie Dollar and so clients wishing to avoid risk would be advised to book payments ahead of the result.

AUD EXCHANGE RATES:

AUD/USD – 0.6801

AUD/GBP – 0.5442

AUD/EUR – 0.6159

AUD/NZD – 1.0764

AUD/JPY – 73.704

OTHER MARKETS:

All Ords (XAO) – 6,791

Gold – A$2,186/oz

Silver –  A$25.99/oz

WTI – US$58.06/barrel

DATA RELEASES TODAY:

AUD - Employment Change & Unemployment Rate at 11.30am

GBP - Retail Sales m/m at 6.30pm

GBP - Official Bank Rate & Monetary Policy Summary at 9.00pm

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Topics: Report, Market

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