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.
Recap Of Last Week:
Last week saw us kick off with weak local retail sales which forced the RBA’s hand on Tuesday, making their decision to cut interest rates a little easier. The official benchmark rate was lowered to 1.25% – a rate not seen in modern times. This cut saw continued weakness in the AUD through the week, however the local stock market benefited and is now near 10 year highs.
U.S Non-Farm Employment numbers were released Friday night in the U.S and came in well under expectations which may muddy the water somewhat for the U.S Federal Reserve who appear stuck in the middle of a rate tightening cycle and a potentially shift to a loosening cycle. The data is not clear with wages growth rising in the U.S but GDP potentially struggling as a result of the ongoing trade war.
Current State Of Trade War:
The trade war between China and the U.S (Donald Trump) appears no where near a resolution, with new tariffs levied on China during May. But, if you read (some of) Donald Trump’s tweet you might think a deal could be struck at any moment. The truth is we don’t know the back workings of trade negotiations between China and the U.S and all we can do is wait for a resolution. Uncertainty is generally hated by the market, and I’d expect any deal should see a rise in the AUD.
The AUD though will continue to remain under pressure given our exceptionally low interest rates and potential for the the RBA to cut again later in the year as suggested by many top economists here and abroad. I still think as Importers caution is required and hedging is the best strategy, I’ve been right (and harping on) about this for a year or so.
No economic data out today and all payments not released yesterday because of the Queens Birthday Bank Holiday will be sent out today.
AUD EXCHANGE RATES:
AUD/USD – 0.6930
AUD/GBP – 0.5453
AUD/EUR – 0.6120
AUD/NZD – 1.0500
AUD/JPY – 75.135
All Ords (XAO) – 6,525
Gold – A$1,909/oz
Silver – A$21.14/oz
WTI – US$53.47/barrel
DATA RELEASES TODAY:
Sign up for a Compass account today and access some of the most competitive rates in the business and arguably the best service.
Senior Corporate FX Dealer
Phone Patrick – 0431 278 632
DISCLOSURE AND DISCLAIMER – GENERAL ADVICE WARNING
The information provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should consider whether our products are appropriate for you and read the FSG and PDS which are available on this website.
This report and must not be copied, either in whole or in part, or distributed to any other person.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.