Compass Global Markets' Blog

Market Update - 9th June 2020 - The Equity Rally Has Continued To Roll On, And So Has The AUD

Posted by Patrick Downes on June 9, 2020 at 8:51 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.

The rally rolls on:

Equities surged again Friday night in the U.S with the tech heavy NASDAQ in fact erasing Covid19 losses and hitting fresh all time highs above 9,900. The DOW added nearly 500 points or 1.7% while European stocks fell slightly.

Stimulus and positive investor sentiment is behind this rally and it's turned into one of the best on record with the S&P500 up 45% in two months. You don't see that every year.

AUD blasts towards 0.7000:

The AUD has been a huge beneficiary of the turnaround, itself up 15 cents from the lows and now likely to test 0.7000 vs. the Greenback in the coming days. The AUD rally could kick on too, considering Australia remains in much better shape than most other countries around the world and particularly the U.K, most of Europe and the U.S.

No data out today other than NAB Business Confidence at 11.30am. Expect equities to lead the AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.6986

AUD/GBP – 0.5482

AUD/EUR – 0.6182

AUD/NZD – 1.0667

AUD/JPY – 75.788

OTHER MARKETS:

All Ords (XAO) – 6,116

Gold – A$2,421/oz

Silver –  A$25.29/oz

Oil – US$38.68 barrel

DATA RELEASES TODAY:

AUD – NAB Business Confidence at 11.30am

Read More

Topics: Report, Market

2nd June 2020: RBA Announcement Cash Rate - held at 0.25%

Posted by Thomas Su on June 2, 2020 at 2:44 PM

Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting today, the Board decided to maintain the current policy settings, including the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points.

Read More

Market Update - 2nd June 2020 - AUD Surges As Protests Erupt Across America

Posted by Patrick Downes on June 2, 2020 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.

AUD moves higher with stocks:

U.S and European stocks mostly gained overnight, while the AUD continued its march higher gaining around 1% over the past 24 hours and briefly eclipsing 0.6800 vs. the Greenback. The AUD has added nearly 200 points vs. the U.S Dollar since Friday evening as protests escalated right across the U.S as a result of the death of George Floyd in Police custody. Things aren't looking great either for the U.S economy with the double whammy of high unemployment and social inequality/unrest coupled with the effects of coronavirus.

The German DAX was the only major index to fall, down around 1.65%.

RBA meeting: 

Locally we have the RBA meeting at 2.30pm this afternoon. The RBA is tipped to keep rates on hold at 0.25% as the impacts of coronavirus start to dissipate somewhat. The number of new cases has been more or less flat for around a month or so with most new cases a result of returning residents or extremely isolated outbreaks as we saw at Cedar Meats. Further restrictions were lifted yesterday in Victoria, and similar restrictions are being lifted right across the country. All of this is pretty bullish for the AUD and the local economy which has weathered the impacts of coronavirus remarkably well. I stand by my call that it's entirely possible Australia avoids the worst of this pandemic.

AUD EXCHANGE RATES:

AUD/USD – 0.6770

AUD/GBP – 0.5413

AUD/EUR – 0.6077

AUD/NZD – 1.0767

AUD/JPY – 72.833

OTHER MARKETS:

All Ords (XAO) – 5,938

Gold – A$2,555/oz

Silver –  A$26.89/oz

Oil – US$35.77 barrel

DATA RELEASES TODAY:

AUD – Cash Rate & RBA Statement at 2.30pm

Read More

Topics: Report, Market

Market Update - 28th May 2020 - AUD/USD Moves Higher With Positive Market Sentiment

Posted by Patrick Downes on May 28, 2020 at 8:29 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 keep ripping higher:

Over the past two months, the ASX has gone from being down 40% to up 32% in what could only be called the most spectacular turnaround of our life times, and the rally looks set to continue with another surge in equity prices overnight. Both U.S and European stocks finished positive with the Dow up 500 points or 2.21%, while in Europe the Spanish IBEX was the best performer up nearly 2.5%. In the same period AUD/USD has surged a whopping 1,100 points or 11 cents from March 19 lows. AUD/USD is now only 1 cent off pre-corona levels. Which suggests to me the rally could be near an end - for the time being.

Hedging: 

As importers, we need to be cognisant of the fact that markets are irrational & volatile and while the past two months has seen a spectacular recovery, the next one or two could see a shift in sentiment and a lower AUD. While my view remains bullish for the AUD, due to our competent handling of the pandemic and now opening of the economy, the AUD is not immune from further market wide sell-offs.

Some of my importer clients have been hedging above 0.6400 and I commend that for that.

Final message: It hurts alot more to watch AUD drop back to the 50's without any Forward Cover in the 60's than it does to watch it climb to 70's with a bit of Forward cover in the 60's. Opportunity cost vs. losing money on an import.

AUD EXCHANGE RATES:

AUD/USD – 0.6585

AUD/GBP – 0.5364

AUD/EUR – 0.5959

AUD/NZD – 1.0664

AUD/JPY – 71.000

OTHER MARKETS:

All Ords (XAO) – 5,608

Gold – A$2,583/oz

Silver –  A$26.03/oz

Oil – US$32.44 barrel

DATA RELEASES TODAY:

AUD - Private Capital Expenditure q/q at 11.30am

USD - Prelim GDP q/q at 10.30pm

Read More

Topics: Report, Market

Market Update - 25th May 2020 - AUD Gains Vs. The Pound Ahead Of Holidays In the U.K & U.S

Posted by Patrick Downes on May 25, 2020 at 9:17 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.

Holidays in the U.S and UK:

Bank holidays in the U.S and U.K tonight mean trade will be thin. The U.K celebrates the Spring Break Holiday while in the U.S, it's Memorial Day. Both U.S and U.K equity markets will be closed for the long weekend however currencies will continue to trade on lighter volume. News flow over the weekend appears to have shifted away from coronavirus and back on to Hong Kong with a flare up in tensions occurring again as a result of a new Chinese security law which is being called a “comprehensive assault” on Hong Kong's rights and freedoms.

AUD News: 

The Aussie Dollar has remained steady versus the Greenback and Euro but added around a half a percent versus the Pound as the U.K continues to struggle to contain new Covid19 cases. The U.K has done a little better than the U.S however poor leadership and populist candidates seems to be both countries Achilles heal at this stage.

Our economy though is expected to dramatically open up over the next month with restrictions slowly being lifted right across the country. All of this is bullish for the AUD and the economy more generally. Australia has kept testing levels high and that's what it giving our leaders more confidence to lift those restrictions put in place in March.

AUD EXCHANGE RATES:

AUD/USD – 0.6508

AUD/GBP – 0.5336

AUD/EUR – 0.5965

AUD/NZD – 1.0669

AUD/JPY – 70.098

OTHER MARKETS:

All Ords (XAO) – 5,608

Gold – A$2,648/oz

Silver –  A$26.22/oz

Oil – US$33.08 barrel

DATA RELEASES TODAY:

USD & GBP - Bank Holidays in the U.S and UK

Read More

Topics: Report, Market

Market Update -20th May 2020 - AUD Holds Ground As Equities Slip On Covid19 Headlines

Posted by Patrick Downes on May 20, 2020 at 9:18 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 holds ground:

The AUD has consolidated above 0.65 vs. the Greenback, 0.53 vs. the GBP and 0.59 vs. the Euro and it's held up well despite a sell off on equity markets overnight. U.S and European stocks mostly slipped, with the exception being the DAX which broke ranks with a 0.15% gain, well above the 0.5% to 1.5% losses seen elsewhere on equity markets. The Dow was the worst performer losing around 400 points but remains a solid 6,000 points above the 24th March low of 18,191.

25,000 on the Dow Jones seems like a crucial level for U.S equities, while locally the ASX200 will need to push through 5,500 for this bull market to continue. Both equity markets have had difficulties to maintain momentum at these key levels and the ASX looks like it'll struggle again to push through without a significant catalyst.

Lack of data:

No economic data again today which continues a quiet week on the data front. The latest Covid19 news though is that Moderna's vaccine trials are not going as well as planned and the headline probably explains a bit while equity markets struggled overnight. Vaccine headlines have become the new trade war headlines as one Twitter commentator put it recently.

Hedging:

Importers should consider hedging with Forward Contracts up here as we've seen a great run from March lows. Last thing you want to do is become complacent, not hedge and then deal at significantly lower levels.

AUD EXCHANGE RATES:

AUD/USD – 0.6506

AUD/GBP – 0.5304

AUD/EUR – 0.5951

AUD/NZD – 1.0723

AUD/JPY – 70.177

OTHER MARKETS:

All Ords (XAO) – 5,658

Gold – A$2,668/oz

Silver –  A$26.51/oz

Oil – US$31.70 barrel

DATA RELEASES TODAY:

No economic data

Read More

Topics: Report, Market

Market Update - 18th May 2020 - AUD Stable Ahead Of Quiet Week

Posted by Patrick Downes on May 18, 2020 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.

Quiet week ahead:

We have a quiet week ahead from a data perspective with basically no tier one economic data released until Friday evening. As such all eyes will be on the WHO and a battle brewing between China and the U.S on 1/allowing private inspectors to investigate the origins of #Covid19 in Wuhan and 2/Taiwan's admission as an observer (at the moment they are barred from being a part of the WHO) at the next WHO meeting. All of a sudden it seems the U.S/China trade war is back on and this creates some real uncertainty for markets and particularly so for equities and the AUD, which have a had a pretty good run since mid March lows, at the height of the panic.

Where to from here:

While I continue to believe the lows are in for the AUD and equities, it doesn't mean I don't think further pullbacks are unlikely in what continues to be pretty uncertain times for markets and the global economy.

U.S and European stocks closed out Friday nights trading sessions slightly ahead, which bodes well for our local market which right now appears to be headed for a positive open at 10.00am.

In other news further restrictions are telegraphed to be lifted across Australia over the next month or so which should support jobs and economic growth. A lifting of travel bans though remains a long long way away.

AUD EXCHANGE RATES:

AUD/USD – 0.6387

AUD/GBP – 0.5278

AUD/EUR – 0.5901

AUD/NZD – 1.0740

AUD/JPY – 68.495

OTHER MARKETS:

All Ords (XAO) – 5,492

Gold – A$2,721/oz

Silver –  A$26.14/oz

Oil – US$30.34 barrel

DATA RELEASES TODAY:

CAD - Bank Holiday in Canada

Read More

Topics: Report, Market

Market Update - 13th May 2020 - AUD Takes Breather After Sensational Recovery

Posted by Patrick Downes on May 13, 2020 at 9:06 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 Stalls After Stellar Recovery:

The AUD has taken a well earned breather after a stellar run from 0.55 back to 0.65 vs. the Greenback. AUD/USD hit a 17 year low of 0.5505 on March 19 but has since recovered a whopping 10 cents or 18% as global markets cheered on government stimulus, QE and Australia's remarkable ability to avoid the worst of the Covid19 Pandemic.

AUD/EUR paints a similar picture up nearly 20% from a low of 0.5040 on March 19. Earlier this week saw the first stage of restrictions lifted across the country and it'd be fair to expect a further lifting of restrictions as the month wears on and assuming new case numbers remain low. All of this should be bullish for the AUD vs. the EUR, GBP and USD, particularly given the dire situation across the U.S and parts of Europe and the U.K.

Strategy For Importers:

I continue to think the AUD will stay above the lows published in March and would be hopeful we can test 0.7000 before the end of the year. This however doesn't suggest importers should sit back and relax, as market corrections will continue to occur which will drag the AUD lower with it.

My suggestion is Importers should continue to book Forward Contracts as larger orders become due.

AUD EXCHANGE RATES:

AUD/USD – 0.6444

AUD/GBP – 0.5247

AUD/EUR – 0.5935

AUD/NZD – 1.0612

AUD/JPY – 69.097

OTHER MARKETS:

All Ords (XAO) – 5,497

Gold – A$2,631/oz

Silver –  A$23.91/oz

Oil – US$25.62 barrel

DATA RELEASES TODAY:

AUD - Westpac Consumer Sentiment at 10.30am

AUD - Wage Price Index q/q at 11.30am

GBP - Prelim GDP q/q at 4.00pm

USD - Fed Chair Powell Speaks at 11.00pm

Read More

Topics: Report, Market

Market Update - 8th May 2020 - AUD Surges As Lifting Of Restrictions Gets Closer

Posted by Patrick Downes on May 8, 2020 at 8:50 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 Surges:

The Aussie Dollar has continued to surge through the week gaining as much as 2% vs. the Greenback and nearly 3% vs. the Great British Pound. The gains are a result of generally more bullish investor sentiment but also better than expected local Covid19 infection numbers which continue to decline quicker than many had anticipated.

Scott Morrison is due to meet his national cabinet today and it's widely expected they'll revise COVID-19 restrictions following consistent low numbers of infections. Expectations are a reduction in restrictions in stages and over perhaps as long as a month or two. However overall the likelihood of eased restrictions is certainly bolstering the AUD's appeal as a global safe haven amongst currencies and economies much harder hit by the virus.

It's therefore not inconceivable that the AUD could rally to as high as 70 before the end of the year if we keep outperforming on containment of Covid19.

The ASX is tipped to open around 0.7% higher after a solid session in the U.S and Europe where stocks gained as much as 1.4%.

AUD EXCHANGE RATES:

AUD/USD – 0.6470

AUD/GBP – 0.5225

AUD/EUR – 0.5970

AUD/NZD – 1.0638

AUD/JPY – 68.866

OTHER MARKETS:

All Ords (XAO) – 5,449

Gold – A$2,637/oz

Silver –  A$23.50/oz

Oil – US$24.70 barrel

DATA RELEASES TODAY:

AUD - RBA Monetary Policy Statement at 11.30am

USD - Non-Farm Employment Change at 10.30pm

Read More

Topics: Report, Market

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

Read More

Topics: Report, Market

Compass Global Markets' Blog

Subscribe to Email Updates

Recent Posts