Market Update – 10th May 2019 – AUD Continues Gradual Decline As Trade Talks Deadline Looms

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.

Trade Talks:

China/U.S trade talks will hit a crescendo tonight as the deadline for a resolution occurs this evening. Donald Trump has promised to significantly increase tariffs on Chinese exports if a resolution to his liking is not forthcoming. However if there is one thing we’ve learned about the Don it’s that he has mastered the ‘art of chest beating’ and not so much ‘the art of the deal’. My hunch is China will delay again tonight and Donald Trump will have no option but to produce a rubbish tweet or two explaining how negotiations have progressed well and will extend the tariffs deadline to allow further negotiations. This scenario would obviously be bullish for the AUD, Equities and Commodities, because tariffs of the likes of what Donald Trump has suggested (25% on all Chinese exports) could have a dramatic impact on both economies. One estimate suggest dire consequences for U.S growth prospects as a result of retaliatory tariffs from China.

AUD Down Again:

In other news, the AUD slipped marginally again overnight across the board, while U.S equities slipped as much as half a percent. European stocks fared worse, with the French CAC and Euro Stoxx 50 leading declines down as much as 1.9% at the close.

Economic data out today includes minutes from the latest RBA meeting, along with GDP and CPI numbers out of the UK and U.S.

AUD EXCHANGE RATES:

AUD/USD – 0.6955

AUD/GBP – 0.5337

AUD/EUR – 0.6195

AUD/NZD – 1.0570

AUD/JPY – 76.334

OTHER MARKETS:

All Ords (XAO) – 6,377

Gold – A$1,838/oz

Silver –  A$21.13/oz

WTI – US$61.76/barrel

DATA RELEASES TODAY:

AUD – RBA Monetary Policy Statement at 11.30am

GBP – GDP & Manufacturing Production m/m at 6.30pm

USD – CPI m/m at 10.30pm

ALL – U.S/China Trade Talks, Tariffs Deadline

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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