Compass Global Markets' Blog

Market Update - 28th November 2019 - Stocks Surge To Record Highs, AUD Stable

Posted by Patrick Downes on November 28, 2019 at 8:24 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 Surge:

U.S stocks continued to make gains overnight on trade optimism with the Dow Jones surging pass 28,100 to a fresh record high. At the same time the local ASX has performed well with ASX200 futures suggesting we'll finally surpass the highs of November 2007.

AUD Stable:

The Aussie Dollar hasn't really moved since my last report on Tuesday and in the absence of economic data this week is likely to move much at all until the RBA cash rate decision next Tuesday. Expectations are that the RBA will hold rates steady at 0.75%.

It's Thanksgiving in the U.S tonight, meaning a Bank Holiday and no USD payments will be processed. Payments will go out Friday evening.

AUD EXCHANGE RATES:

AUD/USD – 0.6745

AUD/GBP – 0.5218

AUD/EUR – 0.6128

AUD/NZD – 1.0521

AUD/JPY – 73.925

OTHER MARKETS:

All Ords (XAO) – 6,950

Gold – A$2,147/oz

Silver –  A$25.02/oz

WTI – US$58.05 barrel

DATA RELEASES TODAY:

AUD - Private Capital Expenditure q/q at 11.30am

USD - Bank Holiday overnight

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Topics: Report, Market

Markets Update - 26th November 2019 - AUD Mixed, Equities Gain On Trade Optimism

Posted by Patrick Downes on November 26, 2019 at 8:34 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 Mixed: 

The Aussie Dollar has started the week mixed, gaining vs. the EURO and JPY but falling vs. the Greenback and Pound. The latest Australian economic data suggests more interest rate cuts from the RBA are likely, which you'd have to think will continue to drag the Aussie Dollar lower over the next 6-12 months. Current consensus forecasts suggest a range of 0.6600-0.7000 over the short to medium terem.

Equities Gain:

U.S and European equities made solid gains overnight suggesting a fair dose of trade deal optimism has been once again intravenously injected into markets. European and U.S stocks gained as much as 0.93% and 1.32% respectively while the Dow Jones broke 28,000 for the second time this year. The final quarter of the year is typically a good quarter for stocks, so another month and a half of gains could see optimism stretch deep into Christmas and New Years.

An ACTUAL trade deal between China and the U.S is starting to be priced in, but it still begs the question what happens to markets post such an event? Will it be a buy the rumour, sell the news event or will markets and the AUD rally into U.S elections next year. A lot to think about, but I suggest continued caution, especially for importers given the bias for a lower AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.6745

AUD/GBP – 0.5221

AUD/EUR – 0.6123

AUD/NZD – 1.0544

AUD/JPY – 73.500

OTHER MARKETS:

All Ords (XAO) – 6,835

Gold – A$2,147/oz

Silver –  A$24.95/oz

WTI – US$57.94 barrel

DATA RELEASES TODAY:

USD - Fed Chair Powell Speaks at 11.00am

AUD - RBA Gov Lowe Speaks at 8.05pm

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Topics: Report, Market

Market Update - 22nd November 2019 - AUD Drifts Lower With Equities As Traders Reassess

Posted by Patrick Downes on November 22, 2019 at 8:41 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 Lower:

Stocks dipped across Europe and the U.S and the Aussie fell overnight as sea-sawing trade negotiations between the WH and China and a damning impeachment inquiry caused investors to reassess their positions leading into the weekend. AUD/USD and the other AUD crosses are all down over half a percent while the Australian All Ords Index has crumbled 120 points or nearly 2% since Wednesday morning, but is tipped to open half a percent higher this morning.

Manufacturing and Services Data:

Economic data due out today consists mainly of manufacturing and services PMI data out of Europe and also locally, however our manufacturing and services data doesn't tend to be a market mover. As a large manufacturing hub driven by German, France and the UK, this European data though provides a real insight into the health of the European economy as such it'll be watched closely this evening. Expectations are for marginal improvement across all metrics tonight which could provide a boost for European stock markets.

AUD EXCHANGE RATES:

AUD/USD – 0.6756

AUD/GBP – 0.5227

AUD/EUR – 0.6103

AUD/NZD – 1.0564

AUD/JPY – 73.411

OTHER MARKETS:

All Ords (XAO) – 6,777

Gold – A$2,158/oz

Silver –  A$25.21/oz

WTI – US$58.32 barrel

DATA RELEASES TODAY:

EUR - German Flash Manufacturing and Services PMI at 7.30pm

GBP - Flash Manufacturing and Services PMI at 8.30pm

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Topics: Report, Market

Market Update - 20th November 2019 - AUD Flat Through Week, FOMC Minutes Due

Posted by Patrick Downes on November 20, 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.

AUD Flat Start:

The AUD has started the week flat, with AUD/USD trading in a tight range between 0.6780 and 0.6820 since Monday. The welcome stability follows last week where we saw AUD/USD fall around 100 points amid poor economic data, namely weak employment data and flat wages growth. The poor data last week likely sets us up for further rates cuts over the next 12 months, with many economists tipping we'll see two more cuts from the RBA which would take our official bench mark interest rate close to zero.

I took a look at bank short term forecasts yesterday and the overwhelming consensus appears to be to expect 'more of the same' with consensus forecasts ranging from around 0.6600 to 0.6900, right now we're comfortably in that range and we have been since July.

FOMC Minutes Due: 

No local data is due out today, however FOMC minutes from the latest U.S Fed meeting are due out at 6.00am tomorrow morning. As is customary, volatility is likely to accompany the release of the minutes.

AUD EXCHANGE RATES:

AUD/USD – 0.6796

AUD/GBP – 0.5250

AUD/EUR – 0.6131

AUD/NZD – 1.0586

AUD/JPY – 73.789

OTHER MARKETS:

All Ords (XAO) – 6,914

Gold – A$2,156/oz

Silver –  A$25.11/oz

WTI – US$55.32 barrel

DATA RELEASES TODAY:

USD - FOMC Meeting Minutes due at 6.00am (tomorrow morning)

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Topics: Report, Market

Market Update - 13th November 2019 - AUD Edges Lower As Trump Talks Tariffs, Again...

Posted by Patrick Downes on November 13, 2019 at 8:49 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 Edges Lower:

Trump has decided to speak again, and in doing so provided further uncertainty about tariffs and the actual progress being made in a trade deal with China. As a result, and not surprisingly, the AUD has eased against most of the majors while U.S equities were a bit stop and start eventually finishing the overnight session flat.

Wages Data Due:

Local wages data is due at 11.30am and is tipped to show quarterly wages growth of around 0.5% - a far cry from the consistent average of around 1% through the 2000's. More recently and since 2016 the average quarterly wages growth has been around 0.4-0.5% and it explains a lot why consumer spending remains subdued and the why the RBA have been so keen to continue to cut rates in a bid to stimulate both spending but also wages growth.

UK and U.S CPI figures are due at 8.30pm and 12.30am respectively.

AUD EXCHANGE RATES:

AUD/USD – 0.6809

AUD/GBP – 0.5291

AUD/EUR – 0.6181

AUD/NZD – 1.0772

AUD/JPY – 74.226

OTHER MARKETS:

All Ords (XAO) – 6,857

Gold – A$2,132/oz

Silver –  A$24.58/oz

WTI – US$56.77 barrel

DATA RELEASES TODAY:

AUD - Westpac Consumer Sentiment at 10.30am

AUD - Wage Price Index q/q at 11.30am

NZD - Official Cash Rate at noon

GBP - CPI y/y at 8.30pm

USD - CPI m/m at 12.30am

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Topics: Report, Market

Market Update - 11th November 2019 - AUD Eases While Stocks Mixed, Local Equities To Open Stronger

Posted by Patrick Downes on November 11, 2019 at 8:01 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 Eases:

The AUD eased over the weekend and equity markets finished the week mixed. Stocks in the U.S and Japan gained, while equities across Europe declined following sluggish French economic figures. Overall though sentiment remains positive as we start the week thanks to glimpses of progress last week between Chinese and U.S trade envoys who have hinted at scale back of existing tariffs.

UK GDP:

Prelim UK GDP figures are due out tonight around 8.30pm with estimates suggesting a number of 0.4% growth in GDP for the quarter. 0.4%, while low, will be an improvement on the previous reading which showed -0.2% growth in GDP. With so much going on in the UK right now including Brexit its safe to say more volatility is expected in AUD/GBP. Since the start of the year AUD/GBP is down around 100 points but the range has remained tight trading between 0.5240 and 0.5700 throughout the year.

There is a U.S Holiday tonight (Veterans Day) as such no USD payments will go out.

AUD EXCHANGE RATES:

AUD/USD – 0.6827

AUD/GBP – 0.5335

AUD/EUR – 0.6192

AUD/NZD – 1.0802

AUD/JPY – 74.600

OTHER MARKETS:

All Ords (XAO) – 6,833

Gold – A$2,126/oz

Silver –  A$24.49/oz

WTI – US$57.44 barrel

DATA RELEASES TODAY:

GBP - Prelim GDP q/q at 8.30pm

USD - Veterans Day National Holiday - U.S Banks Closed

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Topics: Report, Market

Market Update - 8th November 2019 - Investor Sentiment Improves As U.S/China Edge Towards Deal

Posted by Patrick Downes on November 8, 2019 at 8:08 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.

U.S/China Deal Optimism:

Optimism about a trade deal between the U.S and China, and subsequent roll back of tariffs - put in place over the past 2 years - has spurred markets to post solid gains overnight. Markets improved right across the board with the AUD edging higher alongside equities and commodities, while traditional safe havens Bonds, Gold and Silver retreated. AUD/USD edged higher by around 10-15 points, while AUD vs. the JPY, GBP and EUR fared better adding around 0.5%. Our local market is tipped to open 0.2% higher following positive finishes across U.S and European equity markets.

RBA Monetary Policy: 

We hear from the RBA again today. Monetary policy minutes from their latest meeting on Tuesday are due at 11.30am. Earlier in the week the RBA chose to keep rates on hold at 0.75%, however comments and nuances in the accompanying report suggested we might be nearer to the end of this current cycle of loosening monetary policy. The report released at 11.30am is more in depth compared to the accompanying statement released Tuesday afternoon so expect markets to watch this closely for hints on the RBA's next move, if any! Home loans data is released at 11.30am also and is expected to see 2.1% growth in new loans.

AUD EXCHANGE RATES:

AUD/USD – 0.6869

AUD/GBP – 0.5352

AUD/EUR – 0.6216

AUD/NZD – 1.0805

AUD/JPY – 75.088

OTHER MARKETS:

All Ords (XAO) – 6,836

Gold – A$2,129/oz

Silver –  A$24.83/oz

WTI – US$56.89 barrel

DATA RELEASES TODAY:

AUD - RBA Monetary Policy Statement at 11.30am

AUD - Home Loans m/m at 11.30am

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Topics: Report, Market

Market Update - 6th November 2019 - Aussie Dollar Declines Despite Hints RBA Easing Cycle Has Ended

Posted by Patrick Downes on November 6, 2019 at 8:53 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 Holds Rates:

The RBA chose to hold rates Cup Day while hinting in their minutes that the current easing cycle may have concluded. In all we've seen three rates cuts from the RBA since June with benchmark interest rates dropping from 1.5% to 0.75%. The cuts equate to halving of interest payments for borrowers, which should (in economic theory) see demand and growth pickup. However, as many us know economic theory is often just theory and in reality things are very different. AUD/USD which has moved above 0.6900 earlier in the week is now trading back below this key level, however a proper end to the easing cycle could provide support for the AUD over the later part of the year.

But, it all comes down to interest rates and economic sentiment so lets wait and see.

Quiet Day For Data:

We've got a very quiet 24 hours ahead in terms of economic data with no tier 1 data released until Thursday evening when we'll see the Bank of England set interest rates and EU Economic Forecasts. Overnight, U.S and European stocks finished the session mixed the S&P500 and NYSE down, while the Dow and Nasdaq edged higher. Our local market is set to open pretty flat.

AUD EXCHANGE RATES:

AUD/USD – 0.6864

AUD/GBP – 0.5321

AUD/EUR – 0.6195

AUD/NZD – 1.0759

AUD/JPY – 75.001

OTHER MARKETS:

All Ords (XAO) – 6,811

Gold – A$2,153/oz

Silver –  A$25.54/oz

WTI – US$57.25 barrel

DATA RELEASES TODAY:

None.

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Topics: Report, Market

Market Update - 1st November 2019 - AUD Gains Through October, CPI Still Flat

Posted by Patrick Downes on November 1, 2019 at 7:38 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 Rates/CPI Flat:

To catch up on the data out so far this week: Aussie quarterly CPI was flat at around half a percent or 2% annualised. This level of annual inflation is right at the lower edge of the RBA's target of 2-3% annually, and probably suggests further rate cuts are on their way if we see no meaningful improvements to economic metrics. Lower interest rates typically means a lower AUD, so please keep this in mind.

The U.S Fed cut rates for the third time this year on Thursday morning boosting equity markets and the AUD but indicating at the time the U.S economy is still not out of the woods. With interest rates at 1.75%, the U.S Fed still have plenty of room to cut, should the need arise in the coming 12-18 months.

AUD/USD Makes Gains Through October:

AUD/USD is at the highest level since July, following solid gains through October. As importers this presents an opportunity to buy USD at considerably higher levels than at the start of the month when we trading in the lowly 0.66's.

U.S non-farm employment data is due tonight, so potentially more movement in currencies and equities as markets monitor levels of U.S employment.

AUD EXCHANGE RATES:

AUD/USD – 0.6862

AUD/GBP – 0.5292

AUD/EUR – 0.6151

AUD/NZD – 1.0717

AUD/JPY – 74.144

OTHER MARKETS:

All Ords (XAO) – 6,772

Gold – A$2,194/oz

Silver –  A$26.28/oz

WTI – US$54.16 barrel

DATA RELEASES TODAY:

CNY – Caixin Manufacturing PMI at 12.45pm

USD - Non-Farm Employment Change at 11.30am

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Topics: Report, Market

Market Update - 30th October 2019 - AUD Gains, Brits Head Back To Polls, CPI & U.S Jobs Numbers Due

Posted by Patrick Downes on October 30, 2019 at 9:21 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 Gains & Brexit Update:

We're up again overnight with the Aussie Dollar adding around half a percent right across the board as RBA Governor Lowe (in a speech at The Australian National University, in Canberra) hosed down any chance of seeing negative interest rates in Australia.

The best performer though was AUD/GBP which is up nearly 1% as the British Parliament passed overnight a bill that will send Brits back to the polling booths in December to cast a definitive vote on Brexit. This could go either way, but you'd have to think we're now in the final legs of a Brexit outcome here, as such expect more GBP volatility leading up to December 12th.

Local CPI: 

We have another big 24 hours of economic data which kicks off at 11.30am with local CPI numbers. Forecasts are that we'll see 0.5% growth in quarterly CPI, which would be below last quarter and on trend with the exceptionally low inflation we've seen over the past 5 years.

We then get U.S preliminary jobs numbers other wise known as ADP Non-Farm Employment Change at 11.15pm. This is closely followed by U.S GDP numbers and then the U.S Fed Interest Rate decision at 5.00am tomorrow morning. Volatility will be up and about, so those clients happy with current AUD rates and wishing to avoid a lower or higher AUD tomorrow would be best suited to book payments and FX deals before 11.30am this morning.

AUD EXCHANGE RATES:

AUD/USD – 0.6831

AUD/GBP – 0.5300

AUD/EUR – 0.6143

AUD/NZD – 1.0760

AUD/JPY – 74.400

OTHER MARKETS:

All Ords (XAO) – 6,848

Gold – A$2,167/oz

Silver –  A$25.94/oz

WTI – US$55.51 barrel

DATA RELEASES TODAY:

AUD – CPI q/q at 11.30am

USD - ADP Non-Farm Employment Change at 11.15pm

USD - Advance GDP q/q at 11.30pm

USD - FOMC Statement and Federal Funds Rate at 5.00am

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Topics: Report, Market

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