Market Update – 19th February 2020 – AUD Declines With Equities As Apple Forecasts Downgrade, Wages Index Due

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.

Equities Drag AUD Lower:

A poor showing overnight for U.S equities and a profit warning from Apple have resulted in a session of risk off and as a result a lower AUD. The local currency is off around 0.4% against all the majors except EURO where it’s managed to hold its ground around the high 0.61’s. Apple resuscitated fears surrounding the coronavirus suggesting quarterly revenue could be impacted by supply chain issues and lower sales in China. By the end of the session, the Dow Jones finished down 0.56%, while the S&P500 finished 0.29% lower.  Our local market is tipped to open flat after a bit of a sell off yesterday.

Wages Index:

Local wages data is due out this morning at 11.30am and is tipped to show wages growth of around half a percent for the quarter. More broadly, wages growth have been in a funk for the better part of a decade and have rarely grown much above half a percent on a quarterly basis. A further decline in the pace of wages growth could lock in another rate cut from the RBA at their next meeting and see AUD/USD test fresh post GFC lows – certainly not what importers are after.

Hedge With Forward Contracts: 

Importers concerned about a lower AUD can lock in Forward Contracts at todays rates and by default also lock in their profit margins on future imports. Feel free to call me to discuss. At the moment this remains the best option for importers.

AUD EXCHANGE RATES:

AUD/USD – 0.6656

AUD/GBP – 0.5111

AUD/EUR – 0.6164

AUD/NZD – 1.0438

AUD/JPY – 73.166

OTHER MARKETS:

All Ords (XAO) – 7,208

Gold – A$2,395/oz

Silver –  A$27.18/oz

WTI – US$52.33 barrel

DATA RELEASES TODAY:

AUD – Wage Price Index q/q at 11.30am

GBP – CPI y/y at 8.30pm