Market Update – 11th June 2019 – Recap Of Eventful Last Week, AUD Holding In 0.69’s

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

OTHER MARKETS:

All Ords (XAO) – 6,525

Gold – A$1,909/oz

Silver –  A$21.14/oz

WTI – US$53.47/barrel

DATA RELEASES TODAY:

None

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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