Compass Global Markets' Blog

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

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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

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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

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Topics: Report, Market

Market Update - 28th April 2020 - AUD & Stocks Continue Their Climb

Posted by Patrick Downes on April 28, 2020 at 9:13 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 Steams Ahead:

The AUD has pushed higher again overnight taking it to its highest level vs. the Greenback since the rout began in early March. All in all - AUD/USD has gained nearly 1,000 points (or 10 cents) from the low we saw on March 19 when the AUD was whipsawed back and forth on #Covid19 panic and frantic central bank rate cutting and stimulus. AUD/GBP has also recovered and is now back to early Feb levels, while AUD/EUR is back to where we were at the start of March. Overall it's been quite a V shaped recovery with a massive selloff followed by a massive surge.

With restrictions being lifted around the country and new cases remaining low, the hope is that the AUD can continue its good run and kick on or at minimum consolidate the gains we've made over the past month. For all intents and purposes the AUD may well become the cleanest shirt in the dirty laundry especially if hap-hazard efforts in Europe and the U.S remain so.

U.S Stocks Post Gains:

U.S and European stocks posted solid gains overnight with the best performers being the Dow in the U.S and German Dax in Europe which were up around 1.5 and 3% respectively. Aussie equities had a good afternoon yesterday and we'll be hoping to see some further solid gains posted today on the back of this good session in Europe and the U.S. At the moment ASX200 futures are trading up 0.3%.

AUD EXCHANGE RATES:

AUD/USD – 0.6256

AUD/GBP – 0.5080

AUD/EUR – 0.5759

AUD/NZD – 1.0510

AUD/JPY – 67.461

OTHER MARKETS:

All Ords (XAO) – 5,388

Gold – A$2,651/oz

Silver –  A$23.49/oz

Oil – US$14.28 barrel

DATA RELEASES TODAY:

No Data

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Topics: Report, Market

Market Update - 22nd April 2020 - AUD In A Holding Pattern As Oil Price Get Crushed

Posted by Patrick Downes on April 22, 2020 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.

Oil Prices Go Negative:

Yes, you read that correctly. For a period this week WTI (U.S produced oil) had negative prices, meaning U.S oil producers were in fact paying oil traders to take their oil away. The reason for this? Covid19 and far less demand for oil products, along with oil storage around the country at full capacity meaning their is literally no where for the oil to go. The price of U.S oil has more recently stabilised just above zero, but it points to a real issue the U.S has with over production of oil.

What's The AUD Doing?

The AUD is holding up very well - AUD/USD is in a consolidation pattern between 0.6250 and 0.6400 however a break out one way or the other I think is likely in the coming weeks. Which way? I don't know. But if I had to bet on it'd be a move higher. AUD/EUR and AUD/GBP also holding nicely, while AUD/JPY remains in the doldrums around 67.00.

Local Employment Data Today:

Aussie employment data is due out at 11.30am this morning. The release is a an interim release of sorts to take into account the impacts of Covid19. There is no reliable forecast and none is given as such we could see a reasonably increased degree of AUD volatility around the release at 11.30am.

AUD EXCHANGE RATES:

AUD/USD – 0.6256

AUD/GBP – 0.5080

AUD/EUR – 0.5759

AUD/NZD – 1.0510

AUD/JPY – 67.461

OTHER MARKETS:

All Ords (XAO) – 5,278

Gold – A$2,684/oz

Silver –  A$23.72/oz

Crude Oil – US$13.77 barrel

DATA RELEASES TODAY:

AUD – Retail Sales m/m at 11.30am

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Topics: Report, Market

Market Update - 16th April 2020 - AUD & Equities Give Back Some Gains, Employment Data Due

Posted by Patrick Downes on April 16, 2020 at 9:16 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.

Equities & AUD Give Back Gains:

Profit taking and a significant contraction in U.S retail sales numbers was the catalyst overnight for a sell off in equities and the AUD. U.S equities lost between 1.5% and 2.2% as retail sales numbers contracted by 8.7% in the month of March; while in Europe stocks were hit harder falling well over 3%. AUD/USD which had been on a stellar run since mid-March has fallen a little over 2% since yesterday afternoon. Overall though AUD/USD remains six cents above March lows, while the other majors are also above recent lows.

Covid Case Numbers AUS:

Across Australia Covid19 new cases have stayed below 50 for a fourth consecutive day while the number of recoveries has continued to steam ahead. All in all when compared to the rest of the world, we've done a spectacular job containing Covid19 and there are now likely fewer than 2,000 active cases across the whole of Australia (mostly in NSW). In addition the fatality rate has been kept to just under 1% (0.97%) in a demonstration of how fantastic our medical system is in Australia.

Employment Data:

Local employment data is due out this morning and we're expecting to see a significant jump in the number of job losses. Expectations are that 33,000 jobs were lost in March while the unemployment rate likely ticked up to 5.4% from 5.1% - this may end up being quite a conservative estimate.

AUD EXCHANGE RATES:

AUD/USD – 0.6281

AUD/GBP – 0.5008

AUD/EUR – 0.5754

AUD/NZD – 1.0505

AUD/JPY – 67.500

OTHER MARKETS:

All Ords (XAO) – 5,523

Gold – A$2,719/oz

Silver –  A$24.50/oz

WTI – US$25.60 barrel

DATA RELEASES TODAY:

AUD - Employment Change & Unemployment Rate at 11.30am

USD - Unemployment Claims at 10.30pm

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Topics: Report, Market

Market Update - 14th April 2020 - AUD Surges As AUS Covid Cases Drop

Posted by Patrick Downes on April 14, 2020 at 9:20 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.

AUD Makes Big Gains:

The Aussie dollar has been the major beneficiary of lower domestic Covid19 cases with the local currency adding as much as 400 points since last Monday vs. the Greenback and 300 points vs. the Euro. I mentioned a few weeks back that the bottom might be in for the AUD and I'm inclined to double down on that call given the dramatic fall in the number of domestic Covid19 cases. Australia recorded only 41 cases yesterday down from a high of 460 per day on the 28th of March - a little over two weeks ago. Social distancing, quarantining and generally better hygiene is undoubtedly working and pressure is now building on the Government to loosen some of the restrictions that have been in place since early March. If Australia can get the economy going earlier than other countries we may well again become a safe haven for investment which would support the AUD. The lucky country may still ring true.

The local equity market is tipped to continue it's good run, with ASX futures up around 1% as I write. U.S stocks traded last night, with mixed results. The NASDAQ gained 0.5% while the S&P500 lost 1% and the Dow lost 1.39%.

AUD EXCHANGE RATES:

AUD/USD – 0.6362

AUD/GBP – 0.5074

AUD/EUR – 0.5825

AUD/NZD – 1.0477

AUD/JPY – 68.522

OTHER MARKETS:

All Ords (XAO) – 5,439

Gold – A$2,688/oz

Silver –  A$24.17/oz

WTI – US$28.40 barrel

DATA RELEASES TODAY:

CNY - Trade Balance

ALL - G7 Meetings

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Topics: Report, Market

Market Update - 6th April 2020 - AUD Consolidated Gains, U.S Job Losses Skyrocket

Posted by Patrick Downes on April 6, 2020 at 8:54 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 Range Trades:

The AUD consolidated gains last week holding on to a rally which saw AUD/USD move from 0.5505 to around 0.6200 two weeks ago.  Generally speaking the AUD gains the past week have coincided with rallying stock markets globally and optimism that there is light at the end of the corona virus tunnel we find ourselves in. Early indications this morning suggest more bullish momentum for the AUD and equities, with the local market set to open as much as 2.5% higher this morning.

U.S Job Losses Skyrocket:

No surprises here - but we saw a massive jump in U.S job losses with the latest non-farm employment figures out of the U.S showing a whopping 700,000 Americans lost their jobs in the month of March. That number is expected to be dwarfed by Aprils losses which we will see the First Friday of next month. Trump's stimulus plan should offset some of the hurt, however U.S Covid-19 cases continue to grow exponentially and there really is no end in sight at this moment.

It's a Chinese bank holiday today as such no payments will be processed in China today, with money ordinarily received today, likely to credit tomorrow.

AUD EXCHANGE RATES:

AUD/USD – 0.5970

AUD/GBP – 0.4867

AUD/EUR – 0.5516

AUD/NZD – 1.0202

AUD/JPY – 64.704

OTHER MARKETS:

All Ords (XAO) – 5,106

Gold – A$2,687/oz

Silver –  A$23.89/oz

WTI – US$27.91 barrel

DATA RELEASES TODAY:

Bank Holiday in China

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Topics: Report, Market

Market Update - 1st April 2020 - AUD Rises As Covid19 Cases Slow In Aus

Posted by Patrick Downes on April 1, 2020 at 8:39 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 Gaining: 

AUD/EUR has been the biggest gainer this week, adding around 1.5% since the beginning of the week as #Covid19 cases continues to surge in and around Europe's largest metropolitan areas. Europe is, at the moment the epicentre of the pandemic along with the U.S, and that probably explains to some degree the AUD's recent gains vs. both the Euro and USD. Gains have been more muted vs. the Pound as they keep infections somewhat contained - currently the U.K has around 25,000 cases.

Doubts About China Data:

Chinese economic data was released yesterday showing a sharp V-shaped recovery in both manufacturing and non-manufacturing PMI for the month of March. However many in the financial press doubt the figures released, given the CCP's history with finessing economic data to sow a sense of stability and growth. The truth is no one knows if the numbers are accurate, they may be, they may be not. But China, along with Japan, Korea, Singapore and a number of other Asian countries are showing that a reasonably quick recovery is possible with the right social distancing and containment measures.

U.S Jobs Numbers:

U.S jobs data is released tonight - it's the preliminary data only, but gives a pretty accurate read on what the official non-farms data will show Friday night. Typically non-farm employment numbers are one of the most crucial pieces of economic data released each month in the U.S and the market is braced for a horrendous print tonight of around -150,000 jobs. Unemployment claims follow tomorrow night.

AUD EXCHANGE RATES:

AUD/USD – 0.6115

AUD/GBP – 0.4912

AUD/EUR – 0.5537

AUD/NZD – 1.0270

AUD/JPY – 65.700

OTHER MARKETS:

All Ords (XAO) – 5,110

Gold – A$2,570/oz

Silver –  A$22.79/oz

WTI – US$21.69 barrel

DATA RELEASES TODAY:

USD - ADP Non-Farm Employment Change at 11.15pm

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Topics: Report, Market

Market Update - 30th March 2020 - AUD Continues Good Run, Pushing Through 0.6100 Vs. Greenback

Posted by Patrick Downes on March 30, 2020 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.

AUD Continues Good Run:

The Aussie Dollar has continued it's good run over the weekend. AUD/USD added a cent or so since since Friday afternoon, and extended it's gain to around six cents since we hit lows of 0.5505 on the 19th of March. The Aussie Dollar has form with a really bullish move playing out post GFC, when AUD/USD rallied from a low of 0.6000 in November 2008 to nearly 1.1200 by mid 2011. Whether we see the same pattern emerge remains to be seen, but if we can get through #Covid19 reasonably unscathed then there is cause for optimism. Initial data from our social distancing is positive and shows a slowing/stalling in the number of new infections, i.e. they are no longer growing exponentially. Additionally most cases are still being driven by returning residents from overseas as opposed to community transmission.

Stocks Sell Off:

U.S stocks sold off on Friday, no surprises here as no one wants to hold positions into the weekend at the moment. I cut most of my equity positions around lunchtime Friday as the ASX looked like it was turning negative.

When the stocks that have been on a tear fail to make new highs in a bullish market (which Monday morning was) then that's a good sign that momentum is shifting and it's perhaps worth exiting positions. So in the end the ASX lost around 5% on Friday afternoon, in line with the losses on U.S indexes Friday night. Local stocks are likely to open lower this morning.

AUD EXCHANGE RATES:

AUD/USD – 0.6110

AUD/GBP – 0.4903

AUD/EUR – 0.5487

AUD/NZD – 1.0158

AUD/JPY – 65.755

OTHER MARKETS:

All Ords (XAO) – 4,874

Gold – A$2,653/oz

Silver –  A$23.56/oz

WTI – US$22.82 barrel

DATA RELEASES TODAY:

No data.

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Topics: Report, Market

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