Market Update – 22nd August 2018 – USD Index Extends Losses, Supporting Commodities Prices & The AUD

The AUD continued it’s slow grind higher overnight thanks to stronger metals prices and a weaker U.S Dollar. The Dollar Index (a trade weighted average of the USD vs. a basket of currencies) has now fallen for five of the past six trading days after rallying to a high of 96.60. The Dollar strength began around Feb/March coinciding with Trump’s trade war with China, the EU and Canada and is probably the main reason why we’ve seen so much weakness in metals prices and the Aussie dollar. If we see a reversal in USD fortunes we would expect to see stronger metals prices and a stronger AUD and we could see yet further gains if the U.S Federal Reserves tapers it’s interest rate hikes later in the year as some are now speculating could be the case. Previously the market was expecting the U.S Federal Reserve to continue to raise rates over the foreseeable future.

All stock markets in the U.S and Europe bar the London FTSE moved higher but the strong showing in equities markets and for commodities prices overnight isn’t expected to support the ASX – which looks likely to open about half a percent lower this morning.

We have some local data out this morning in Construction work while we’ll also hear from RBA Assistant Governor Debelle around 1pm this arvo. The FOMC also delivers it’s meeting minutes tomorrow morning.

AUD EXCHANGE RATES:

AUD/USD – 0.7326

AUD/GBP – 0.5680

AUD/EUR – 0.6337

AUD/NZD – 1.0965

AUD/JPY – 80.79

USD/BTC – $6,456

OTHER MARKETS: 

All Ords (XAO) – 6,383

Gold – A$1,625/oz

Silver –  A$20.08/oz

WTI – US$66.00/barrel

DATA RELEASES TODAY:

Construction Work Done q/q at 11.30am

RBA Assist Gov Debelle Speaks at 1.10pm

FOMC Meeting Minutes at 4.00am (tomorrow morning)

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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