Market Update – 24th May 2018 – U.S Fed Reassures Markets That They Will Raise Rates Gradually

For me, writing this morning report is a great way to kick start the day as it not only gives me an early accomplishment which typically leads to further accomplishments through the day, but more importantly it is a fantastic way for me to force myself to look at markets and what has happened overnight in the financial universe, which so many of you always want feedback on.

The so called Aussie dollar is continuing to tread water vs. the Greenback, but more recently has started picking up gains against the Euro and GBP after a sustained sell off. The news that AUD/GBP and AUD/GBP is great for the long suffering importers but not so great for those of you who have exposures in GBP and EUR which you need to convert back to Aussie dollars. But as I’ve mentioned in private conversation AUD/GBP and AUD/EUR still represent great value at current levels.

Minutes from the latest U.S Federal Reserve meeting which were released overnight showed that the Fed were likely to be more accommodating of rising inflation and were therefore less likely to rise interest rates quicker than already priced in which is about 3 rate hikes this year. That was seen as reasonably upbeat news for markets as the Fed has been known in the past to hike rates so hard that they inevitably trigger a recession or equities bear market. It would appear that the new Fed Governor Powell may have learnt from his predecessors to take it slowly and let the market digest rate hikes before heaping on further stress. The good news saw equities move higher, with the Dow and S&P up 0.21% and 0.32% respectively.

AUD EXCHANGE RATES:

AUD/USD – 0.7565

AUD/GBP – 0.5663

AUD/EUR – 0.6462

AUD/NZD – 1.0917

AUD/JPY – 83.212

USD/BTC – $7,541

OTHER MARKETS: 

All Ords (XAO) – 6,140

Gold – A$1709/oz

Silver –  A$21.76/oz

WTI – US$71.86/barrel

DATA RELEASES TODAY:

GBP – Retail Sales m/m at 6.30pm

EUR – ECB Monetary Policy Meeting Accounts at 9.30pm