Compass Global Markets' Blog

Market Update - 21st October 2020 - All Eyes On Huge U.S Stimulus Bill

Posted by Patrick Downes on October 21, 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.

Nancy Pelosi Stimulus Package:

Focus shifts to the U.S this week where the market is hoping to see a huge stimulus package agreed on between Nancy Pelosi/House Democrats and the Trump Administration. The House of Reps led by the Democrats have already passed $2.2 trillion in spending, but the bill is stuck with Mitch McConnell and Senate Republicans who are holding up the stimulus package for political reasons. Negotiation's are ongoing and it's understood that Republicans have suggested $1.9 trillion as a number they'd support. Should Dems agree the package could become law as soon as this weekend and it would provide a huge shot in the arm for the ailing U.S economy that has been ravaged by Covid. The bill would likely also spur stock markets and risk assets such as the Aussie Dollar.

AUD Creeping Lower: 

The Aussie Dollar fell with U.S equities yesterday and is off around half a percent across the board since my last morning report on Monday. As suggested above U.S stimulus negotiations are the biggest catalyst for the Aussie Dollar this week and markets more broadly, as such their isn't a great deal to talk about.

UK CPI is due out tonight, followed by a speech from ECB President Lagarde.

The local stock market had a bad day yesterday, but a positive finish on Wall Street overnight sets us up for a better day today.

AUD EXCHANGE RATES:

AUD/USD – 0.7010

AUD/GBP – 0.5413

AUD/EUR – 0.5930

AUD/NZD – 1.0683

AUD/JPY – 74.029

OTHER MARKETS:

All Ords (XAO) – 6,396

Gold – A$2,706/oz

Silver –  A$35.01/oz

Oil – US$41.23 barrel

DATA RELEASES TODAY:

GBP - UK CPI due at 5:00pm

EUR – ECB President Lagarde Speaks at 6:30pm

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Topics: Report, Market

Market Update - 19th October 2020 - AUD Consolidates Above 0.7000 As Victorian Restrictions Ease

Posted by Patrick Downes on October 19, 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.

AUD Holding Above 0.7000:

Since Covid kicked off in March, AUD/USD has traded as low as 0.55 and as high as 0.74, highlighting just how volatile markets have been this year. More recently, we've settled above 0.70 thanks to Australia having again been one of the best performing economies during a crisis, you'll all remember the same thing played out during the GFC (cleanest shirt in the dirty laundry and no recession). Versus all the other major currencies the AUD has displayed a similar pattern, initially crushed in March only to rally consistently through the remainder of the year. AUD/EUR and AUD/GBP are currently above 0.60 and 0.54 respectively.

Where are we heading?

Well, that is the million dollar question and if I could predict it with any certainty I'd have a one way ticket to eternal riches. But the truth is, Australia has weathered the Covid storm particularly well, case numbers have never really got out of hand other than in my home state of Victoria (max 700+ a day). But Vic is coming out the other end and with that we should see a solid amount of optimism and growth in this region. The lifting of border restrictions between the states should follow and with that domestic travel should boom as an alternative to international travel - all of this is bullish for the Aussie economy and the AUD. The RBA has been particularly accommodative and has a clear mandate to keep rates low via a form of Aussie Q.E and direct intervention via their monthly cash rate decision - currently rates are on hold at 0.25% but expectations are that we could see another shot in the arm with a rate cut to 0.10% or something similar.

I remain pretty optimistic (as I always am) and think the worst is behind us. Both state and federal government stimulus in the hundreds of billions of dollars sets us up well for the coming years and growth shouldn't be too hard to come by via a booming domestic and consumer driven economy.

Vaccine Rolls Out In China:

In China, a vaccine for SARS-CoV-2 has started to be deployed across the country. The vaccine is safe and triggers the antibody response and can be taken at any of the major hospitals across the country. This bodes well for the trials by Astra Zeneca in the U.K and those in other parts of the world including the U.S.

AUD EXCHANGE RATES:

AUD/USD – 0.7044

AUD/GBP – 0.5442

AUD/EUR – 0.6003

AUD/NZD – 1.0711

AUD/JPY – 74.214

OTHER MARKETS:

All Ords (XAO) – 6,385

Gold – A$2,682/oz

Silver –  A$34.12/oz

Oil – US$40.94 barrel

DATA RELEASES TODAY:

CNY - GDP q/y at 1:00pm

USD - Fed Chair Powell Speaks at 11:00pm

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Topics: Report, Market

Market Update - 21st July 2020 - AUD Continues To Edge Higher As Economy Opens Up

Posted by Patrick Downes on July 21, 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 Edges Higher:

The Aussie Dollar has inched higher over the past week, surpassing 0.7000 vs. the Greenback for the second or third time since early June. Despite low interest rates and a persistent lock-down in Victoria, we are seeing a pattern emerge similar to past crisis, with the most recent GFC springing to mind. During the GFC, the AUD which initially fell, went on to be one of the best performing G20 currencies eclipsing the USD in value in within a couple of years. In fact AUD/USD fell to 0.6000 before rallying to 1.1000. While I'm not saying the same thing is destined to occur again, we are certainly performing far better in the battle against Covid than many other G20 countries and that has seen the local currency surge in value since March.

Stocks Bid Up: 

The stock market has also been a beneficiary of free flowing money from central banks and government's across the globe, with the best performing sectors being bio-tech, gold and technology stocks. Tech stocks are benefiting from the shift to online shopping, bio-tech is benefiting from the search for Covid remedies and Gold is surging in value as a result of money printing.

RBA Governor Philip Lowe is due to deliver a speech titled "Covid-19: The Labor Market and Public-sector Balance Sheets" at the Anika Foundation Luncheon and we should therefore hear quite a bit on the RBA's thoughts about where the labour market is headed, unemployment numbers and more. There is probably quite a bit for Lowe to cover and it'll be interesting to follow some of the press following the speech.

AUD EXCHANGE RATES:

AUD/USD – 0.6986

AUD/GBP – 0.5511

AUD/EUR – 0.6100

AUD/NZD – 1.0638

AUD/JPY – 74.955

OTHER MARKETS:

All Ords (XAO) – 6,112

Gold – A$2,589/oz

Silver –  A$28.35/oz

Oil – US$39.81 barrel

DATA RELEASES TODAY:

AUD - RBA Gov Lowe Speaks at 12.30pm

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Topics: Report, Market

Market Update - 14th July 2020 - AUD In Holding Pattern Since June, Stocks Performing Well

Posted by Patrick Downes on July 14, 2020 at 8:38 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.

AUD Stable:

Despite fresh lock-downs across Victoria and caution across other states, the AUD has remained reasonably stable throughout. For the better part of a month and a half AUD/USD has traded in a 2 cent range between 0.68 and 0.70 and a similar pattern has emerged for AUD/EUR and AUD/GBP with both trading in reasonably tight ranges since the start of June.

Real unemployment is high across the country, but JobKeeper/Seeker payments have kept businesses afloat and allowed individuals in affected industries (like retail/travel and tourism) to keep picking up a pay check. This has essentially deferred for the time being the worst impacts of Covid19 lock-downs. Markets are obviously still pricing in good outcomes and this is evident by a booming stock market (ASX All Ords back above 6,000) and the Aussie Dollar back at pre-Covid19 levels. I remain cautiously optimistic that the worst is behind us.

Local Stocks:

The local stock market is tipped to open in the red today following the lead from Wall Street which finished flat or lower - the Nasdaq was the worst performer down over 2% as investors took profits on high flying tech stocks.  European stocks performed better up well over 1% across the board. U.S stock futures as they stand right now at 8.33am are showing somewhat of a positive reversal, which may bode well for the local market today.

No economic data is due out today, however we have a bank holiday in France tonight.

AUD EXCHANGE RATES:

AUD/USD – 0.6912

AUD/GBP – 0.5496

AUD/EUR – 0.6087

AUD/NZD – 1.0580

AUD/JPY – 74.200

OTHER MARKETS:

All Ords (XAO) – 6,089

Gold – A$2,596/oz

Silver –  A$27.52/oz

Oil – US$39.81 barrel

DATA RELEASES TODAY:

No economic data

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Topics: Report, Market

Market Update - 8th July 2020 - Equities & AUD Slide As Victoria Enters A Second Lockdown

Posted by Patrick Downes on July 8, 2020 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.

Good morning all. I've been a little slack and irregular of late with my morning reports, managing to get maybe one or two out per week recently. I blame Covid disruptions for the lack of consistency and have set a goal to put out a report on a more consistent basis, perhaps every second business day, as a minimum.

Equities Slide:

Markets fell across both Europe and the U.S overnight following a weak lead from Asian stocks yesterday. U.S stock indices dipped as much as 1.51%, with the Dow the worst performer, while in Europe the UK FTSE led the declines down 1.53% at the close. The falls across equity markets not surprisingly rubbed off on the AUD, with AUD/USD again failing to push through 0.7000 which has become a key level of resistance. AUD/USD is now down around 1% from yesterdays highs. It's a similar story for AUD/GBP which is down 1%, while the Aussie has held it's ground vs. the EURO.

No economic data is due out today, as such Covid news flow is again likely to guide markets. The shutting down of the Victorian economy for a second time is likely to be a drag on the ASX today as news filters through and market participants tread cautiously.

AUD EXCHANGE RATES:

AUD/USD – 0.6911

AUD/GBP – 0.5504

AUD/EUR – 0.6130

AUD/NZD – 1.0576

AUD/JPY – 74.377

OTHER MARKETS:

All Ords (XAO) – 6,126

Gold – A$2,583/oz

Silver –  A$26.28/oz

Oil – US$40.42 barrel

DATA RELEASES TODAY:

No economic data

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Topics: Report, Market

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

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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

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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

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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

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Topics: Report, Market

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

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Topics: Report, Market

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