Market Update – 23rd February 2018 – Commodities Slide Then Rebound As China Gets Back To Work

The Chinese returned to work yesterday after a week long layoff and in doing so initially crushed the price of commodities almost across the board and causing some weakness in the Aussie dollar. However the flurry of trading that sent base metal as much as two percent lower yesterday arvo may have just been some initial re-balancing as commodities markets and the Aussie dollar recovered all the lost ground reasonably quickly. In fact AUD/USD is higher today than this time yesterday, while AUD/GBP teeters around 0.5600.

Bloomberg’s top story reads like a battle of the titans this morning and gives some credence to the notion that no one really knows which direction the AUD will move with the title “Funds Clash Over Which Way the Australian Dollar Is Headed”. Essentially you have one camp of economists who believe that the AUD is headed lower as a result of rising interest rates around the world (while Aussie rates remain stagnant) while the other camp believes a new mining super cycle may be the catalyst for the AUD to test previous highs above 0.8500 and even beyond. Personally I think both assumptions are correct and hence will likely cancel each other out meaning….drum roll…expect more of the same. AUD/USD between 0.7200-0.8200 seems like a reasonable range to me over the next 12 months.

AUD EXCHANGE RATES:

AUD/USD – 0.7843

AUD/GBP – 0.5619

AUD/EUR – 0.6362

AUD/NZD – 1.0684

AUD/JPY – 83.727

USD/BTC – $9,982

COMMODITIES: 

Gold – A$1696/oz

Silver –  A$21.17/oz

WTI – US$62.63/barrel

DATA RELEASES TODAY:

EUR – CPI at 9.00pm