Market Update – 11th September 2018 – AUD/USD Grinds Higher With Equities, Commodities Still Battling

AUD/USD starts the trading day marginally higher than yesterday, while AUD/GBP and AUD/EUR fell as better economic data out of the U.K supported the Pound and by association also the Euro. U.S & European equities were also buoyed by the generally better sentiment across markets overnight managing to finish Monday mostly in the green. The tech-heavy Nasdaq was the best performer in the U.S while the Euro Stoxx 50 was up by nearly 0.5% at the close.

Base metal prices remain somewhat on the nose with Zinc, Copper, Nickel and Iron Ore all back at late 2016 levels having wiped out all the gains made during 2017 in the early part of this year. However looking at demand and supply fundamentals for these base metals and you see a common thread – tightening supply (as a result of low incentive prices) and still growing demand as coordinated growth across the globe continues. Hard to think of this recent commodities and AUD sell-off as anything but a knee jerk reaction to trade fears. China interestingly still posted higher than expected CPI numbers yesterday while last week their trade balance figures showed “exports and imports grew faster than expected in yuan terms last month, showing both domestic and international demand continue to rise despite worsening relations with the U.S. Exports rose 7.9 percent in August in yuan terms.”

NAB business confidence numbers out this morning followed by UK earnings at 6.30pm this evening. NAB business confidence will be the most interesting here given business confidence is a leading indicator of future economic expansion. Business confidence has been rising since early 2016 but more recently that confidence has plateaued. Interesting to see what/if any the impact of a new PM has had on business confidence and the recent escalation of trade tensions between Trump and China.

AUD EXCHANGE RATES:

AUD/USD – 0.7082

AUD/GBP – 0.5430

AUD/EUR – 0.6100

AUD/NZD – 1.0874

AUD/JPY – 78.756

USD/BTC – $6,261

OTHER MARKETS: 

All Ords (XAO) – 6,249

Gold – A$1,680/oz

Silver –  A$19.93/oz

WTI – US$67.47/barrel

DATA RELEASES TODAY:

AUD – NAB Business Confidence at 11.30am

GBP – Average Earnings Index 3m/y at 6.30pm

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