Market Update – 18th September 2018 – Trump Could Pull Trigger On Next Round Of China Tariffs

No morning market update from me yesterday as there wasn’t a great deal to report on other than the same old Trump/China merry go round we’ve been on since February. Speculation was that Trump’s latest round of tariffs on US$200 billion of exports to the U.S could come into effect overnight, however as yet there has been no confirmation that any additional tariffs have gone ahead. The resulting effect of this trade with China since it’s debut in February has seen a strengthening in the U.S Dollar (as a safe haven) while crushing commodities prices, emerging markets currencies and the currencies of countries which export commodities such as Canada and Australia. Conceivably the AUD and commodities prices will recover once some finality and end to the trade war occurs. At this stage though, it remains murky at best to determine what if any the end game might look like, however you’d have to think for Trump that end game would be tariffs on ALL of China’s exports to the U.S.

The Aussie dollar has held on to gains made late last week but remains at 21 month lows vs. the Greenback and 30 month lows vs. the Euro which is certainly not ideal for importers but is perhaps a new normal that we all need to get used to. While I understand the want and perhaps also the need to chase higher levels before making payments, the reality is that while we might see the mid 0.70’s vs. the U.S in the short term don’t expect to catch 0.80 any time soon. The same goes with AUD/EUR and AUD/GBP which are both well off recent highs.

Monetary Policy Meeting Minutes from the latest RBA meeting are due out this morning at 11.30am and these will be picked through in detail by market participants looking for a read on the RBA’s likely next move in interest rates. Booming GDP figures in the latest quarter is probably what most people will be looking for some RBA feedback on. Other than that, not much else is due this afternoon or overnight.

AUD EXCHANGE RATES:

AUD/USD – 0.7149

AUD/GBP – 0.5425

AUD/EUR – 0.6113

AUD/NZD – 1.0871

AUD/JPY – 80.000

USD/BTC – $6,226

OTHER MARKETS: 

All Ords (XAO) – 6,293

Gold – A$1,673/oz

Silver –  A$19.74/oz

WTI – US$68.51/barrel

DATA RELEASES TODAY:

AUD – Monetary Policy Meeting Minutes

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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