Market Update – 1st May 2018 – Sell In May And Go Away? What’s In Store For the AUD This Month?

The old saying in financial markets is “Sell in May and Go Away” but how does that prophecy stack up for the Aussie dollar? I thought I’d do some very rough analysis of the Aussie dollars performance over the past few years during May. What I found is generally AUD/USD performs quite poorly and over the past 3 years (despite the AUD trending higher during this time) we’ve seen quite substantial declines in the Aussie dollar during May. 2015 saw a 300 point drop (4%), 2016 a 500 point drop (7%) and 2017 a 100 point drop (1.5%). While history doesn’t repeat it does tend to rhyme and with a recently surging USD and likely higher interest rates in the U.S over the course of 2018 this bearish May month trend could continue.

Ahead is the RBA Cash Rate announcement at 2.30pm however they have become somewhat of a non-event recently with the RBA having left interest rates on hold for the better part of 2 years. Interest rates stand at 1.5% currently and with slack growth and a slack labour market the cash rate is unlikely to change any time soon.

AUD EXCHANGE RATES:

AUD/USD – 0.7528

AUD/GBP – 0.5466

AUD/EUR – 0.6232

AUD/NZD – 1.0703

AUD/JPY – 82.275

USD/BTC – $9,224

OTHER MARKETS: 

All Ords (XAO) – 6,071

Gold – A$1747/oz

Silver –  A$21.69/oz

WTI – US$68.52/barrel

DATA RELEASES TODAY:

AUD – RBA Rate Statement at 2.30pm