Market Update – 10th September 2018 – Sell Off Continues As Trump Threatens All Chinese Imports With Tariffs

Another poor finish to the week for almost all assets classes as commodities, equities and the AUD all fell. The only bright spot being the German and French stock markets which managed to buck the trend and finish marginally higher at the close on Friday evening. Trump doubled down on his threats to impose tariffs on ALL Chinese imports which has only created further instability in markets and resulted in further risk off selling almost across the board.

The AUD is back below 0.7100 for the first time since early 2016 and may head lower still if Trump goes through with further U.S tariffs on Chinese goods. Forecasts and opinions on where the AUD will be in 12 months remain very much divided with some forecasters expecting the AUD to be higher in 12 months, while others think  the high 0.60’s to low 0.70’s more likely. The truth as they say is probably somewhere in-between.

On a bright note the Australian economy released GDP figures on Wednesday and the data was good with the economy growing at 0.9% or 3.6% annualised. The GDP figures were certainly a surprise but do show that low interest rates and government fiscal policy is helping to stimulate growth. Should we see continued GDP growth in the vicinity of 3-3.5% then you’d have to expect interest rates will go higher at some point in 2019.

Ahead tonight is U.K GDP and Manufacturing Production numbers. Both are out around 6.30pm this evening and expected to come in pretty flat at 0.2% month on month. Given the low forecast we could see a bounce in the GDP and fall in AUD/GBP if the estimates are well beaten.

AUD EXCHANGE RATES:

AUD/USD – 0.7079

AUD/GBP – 0.5470

AUD/EUR – 0.6121

AUD/NZD – 1.0847

AUD/JPY – 78.643

USD/BTC – $6,255

OTHER MARKETS: 

All Ords (XAO) – 6,252

Gold – A$1,682/oz

Silver –  A$19.93/oz

WTI – US$67.71/barrel

DATA RELEASES TODAY:

GBP – GDP & Manufacturing Production at 6.30pm

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