Market Update – 1st November 2019 – AUD Gains Through October, CPI Still Flat

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.

Fed Cuts Rates/CPI Flat:

To catch up on the data out so far this week: Aussie quarterly CPI was flat at around half a percent or 2% annualised. This level of annual inflation is right at the lower edge of the RBA’s target of 2-3% annually, and probably suggests further rate cuts are on their way if we see no meaningful improvements to economic metrics. Lower interest rates typically means a lower AUD, so please keep this in mind.

The U.S Fed cut rates for the third time this year on Thursday morning boosting equity markets and the AUD but indicating at the time the U.S economy is still not out of the woods. With interest rates at 1.75%, the U.S Fed still have plenty of room to cut, should the need arise in the coming 12-18 months.

AUD/USD Makes Gains Through October:

AUD/USD is at the highest level since July, following solid gains through October. As importers this presents an opportunity to buy USD at considerably higher levels than at the start of the month when we trading in the lowly 0.66’s.

U.S non-farm employment data is due tonight, so potentially more movement in currencies and equities as markets monitor levels of U.S employment.

AUD EXCHANGE RATES:

AUD/USD – 0.6862

AUD/GBP – 0.5292

AUD/EUR – 0.6151

AUD/NZD – 1.0717

AUD/JPY – 74.144

OTHER MARKETS:

All Ords (XAO) – 6,772

Gold – A$2,194/oz

Silver –  A$26.28/oz

WTI – US$54.16 barrel

DATA RELEASES TODAY:

CNY – Caixin Manufacturing PMI at 12.45pm

USD – Non-Farm Employment Change at 11.30am

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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