Compass Global Markets' Blog

Market Update - 30th June 2020 - FY2020 To Close With An Equities Rebound & Powell

Posted by Patrick Downes on June 30, 2020 at 9:34 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 Holds Ground:

The AUD has spent the last four weeks consolidating following a rally that could only be called epic, between late March and the end of May. In the space of effectively two months AUD/USD added 13 cents, with a similar story panning out for AUD/EUR and AUD/GBP.

The bounce in the local currency has obviously dented profits for exporters, while importers have benefited greatly from the higher Aussie Dollar. While I can't categorically say we are out of the woods completely, it does appear that Australia has a much better handle on the virus than the rest of the world and particularly places like the U.S and South America which are now seeing infection numbers grow unchecked.

Equities Markets:

Stock markets have ridden the bust and boom from the initial pandemic hysteria to the post pandemic euphoria and things appear to have settled somewhat. Having said that for the local market, 6,000 on the ASX seems a tough hurdle to pass. For the better part of four weeks our market has tried and failed to launch and hold much above 6,000 which could be an indication another correction is on the cards. I've done particularly well during the volatility in the stock market but I remain quite aware of the risks of a further stock market meltdown and so should all investors.

Chinese Data & Powell: 

Some Chinese economic data is released today with manufacturing PMI due at 11.00am. China has been ratcheting up it's manufacturing sector over the past few months following a full Covid19 shutdown and it seems like things are back to some normality which should be reflected in the data due today.

Fed Chair Powell testifies in front of Congress tonight with questions likely to revolve around further stimulus measures and monetary policy. We could see some market volatility around 2.30am.

AUD EXCHANGE RATES:

AUD/USD – 0.6841

AUD/GBP – 0.5542

AUD/EUR – 0.6079

AUD/NZD – 1.0662

AUD/JPY – 73.616

OTHER MARKETS:

All Ords (XAO) – 5,915

Gold – A$2,580/oz

Silver –  A$26.00/oz

Oil – US$39.73 barrel

DATA RELEASES TODAY:

CNY - Manufacturing PMI at 11.00am

USD - Fed Chair Powell Testifies at 2.30am

Read More

Topics: Report, Market

Market Update - 19th June 2020 - Equities & AUD Steady Amid New Covid19 Outbreak In Beijing

Posted by Patrick Downes on June 19, 2020 at 8:10 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 & Equities:

The Aussie Dollar and Equities have shown a degree of resilience over the past few days which I wasn't expecting. A fresh outbreak of Covid19 at a seafood market in Beijing had all the hallmarks of creating another risk off scenario and subsequent savaging of markets. However, traders have become pretty thick skinned recently and both the AUD and equities are holding ground reasonably well. In addition it looks like the Chinese Centre for Disease Control has already locked down the latest outbreak in Beijing which is great news.

AUD/USD is trading above 0.6800 this morning, with the high being 0.7050 set around a week ago. It's a similar picture with AUD/GBP and AUD/EUR which are both only marginally off their recent highs set earlier this month.

Equity markets fell in Europe overnight, while U.S indices were mixed. The Nasdaq was the best performer up 0.33%, while the Dow was off 40 points or 0.15%. Our local market is tipped to open around 0.6% higher this morning.

AUD EXCHANGE RATES:

AUD/USD – 0.6805

AUD/GBP – 0.5481

AUD/EUR – 0.6077

AUD/NZD – 1.0624

AUD/JPY – 72.911

OTHER MARKETS:

All Ords (XAO) – 6,051

Gold – A$2,513/oz

Silver –  A$25.36/oz

Oil – US$38.99 barrel

DATA RELEASES TODAY:

EUR – EU Economic Summit

CAD – Core Retail Sales m/m at 10.30pm

Read More

Topics: Report, Market

Market Update - 16th June 2020 - AUD Holds Grounds As Equities Bounce Back, Nuclear Is Having A Renaissance

Posted by Patrick Downes on June 16, 2020 at 9:39 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 Consolidating:

The AUD has held its ground around 0.69 vs. the Greenback and has done similar across the board maintaining 0.54 vs the GBP and 0.60 vs. the EURO. What's even more impressive is it's done this despite a pretty severe equity sell off in the U.S on Friday night. I've suggested a few times over the past month or so that the AUD may well test 0.7000 in the short to medium term and it's looking more and more likely with restrictions slowly lifting across the country. Additionally interstate and some international travel may become a possibility in the not too distant future which will further support the economy.

Iron Ore Prices:

On top of that, Brazil is battling a large Covid19 pandemic and demand for Australian iron ore has increased along with the Iron Ore price with the shuttering of mines owned by Vale and others across Brazil. All of this suggests further bullish momentum for the AUD with the proviso that we don't see another cataclysmic meltdown in stock prices (which always remains a possibility).

Stocks Today:

In the U.S overnight  stocks rallied, which sets us up for a better day on the ASX today - ASX Futures are set to open around 2.5% higher this morning.

Uranium - a sector I've had a close eye on over the past few years has performed well as a result of Covid19 mine closures and no demand destruction. Additionally Uranium & Nuclear Energy is encountering somewhat of a renaissance as policy makers (including AOC in the U.S) open the door to Nuclear Energy as a solution to carbon emissions. The price of uranium, which fuels nuclear reactors, is up over 35% this year and is the best performing commodity.

AUD EXCHANGE RATES:

AUD/USD – 0.6907

AUD/GBP – 0.5467

AUD/EUR – 0.6093

AUD/NZD – 1.0661

AUD/JPY – 74.206

OTHER MARKETS:

All Ords (XAO) – 5,873

Gold – A$2,490/oz

Silver –  A$25.11/oz

Oil – US$37.46 barrel

DATA RELEASES TODAY:

GBP - Claimant Count Change at 4.00pm

USD - Core Retail Sales m/m at 10.30pm

USD - Fed Chair Powell Testifies at midnight

Read More

Topics: Report, Market

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

Compass Global Markets' Blog

Subscribe to Email Updates

Recent Posts