Market Update – 16th May 2018 – US Retail Sales Chug Along, Spurring USD Rally & Equities Sell Off

Strong retail sales numbers released overnight in the U.S has helped boost bets that the U.S Federal Reserve will hike rates at least three times before the end of the year. The more bullish bets on interest rates helped the USD and Dollar Index surge the most since March the chart now starting to look quite bullish again, after declining for the better part of 2017 and even early 2018. When you look at AUD/USD – we’ve seen about a 1% drop since this time yesterday, while a more macro view shows us that AUD/USD has fallen from 0.8100 since the 1st February (about the time Trump started Tweeting about trade and trade wars, etc.

0.7500 for AUD/USD is seen as the long term average as such being at these levels is really not at all unusual and so for the bulk of our import and export clients I’d probably suggest simply getting comfortable with these levels as a base case AUD/USD.

More economic data out today with Westpac Consumer Sentiment and the Wages Index out this morning. Westpac Consumer Sentiment doesn’t have a forecast figure but consumer sentiment generally hasn’t been strong lately, which probably explains the continued weak retail sales environment we are in. Wages are tipped to have grown by 0.6% in the latest quarter which would be the fastest pace since 2015, but the picture isn’t pretty for wages growth if you look at it over 10 years+ with wages growth declining since the GFC and quite dramatically.

AUD EXCHANGE RATES:

AUD/USD – 0.7467

AUD/GBP – 0.5529

AUD/EUR – 0.6313

AUD/NZD – 1.0884

AUD/JPY – 82.389

USD/BTC – $8,457

OTHER MARKETS: 

All Ords (XAO) – 6,198

Gold – A$1730/oz

Silver –  A$21.81/oz

WTI – US$71.00/barrel

DATA RELEASES TODAY:

AUD – Westpac Consumer Sentiment at 10.30am

AUD – Wages Index at 11.30am

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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