Market Update – 26th June 2019 – Stocks, AUD & Commodities Retreat On Risk Aversion

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.

Stocks & AUD Retreat:

Stocks retreated with the AUD and commodities overnight as comments from U.S Fed Chair Powell suggested he takes seriously the “market’s apparently somewhat tepid inflation expectations.” This could confirm what many believe; that a U.S recession is nearing. Inevitably, that will also mean lower interest rates as the Fed tries to fight it, perhaps even negative interest rates or NIRP (negative interest rate policy) as we’ve seen in Japan and Switzerland. Has that worked? Arguably, no.

Inflation Stagnating:

Australia is seeing a similar scenario with inflation stagnating along with growth in the economy, so much so that we saw the RBA cut rates earlier this month to their lowest point in history. The RBA’s 25 basis point cut to interest rates also saw AUD/USD dive to it’s lower level since January 2016, which while being a detractor for importers has been a boon for exporters whose products become cheaper on the global stage.

Bit of Data:

The RBNZ decide on interest rates at midday with no change expected, while in the UK we’ll see the Bank Of England’s inflation report hearings, otherwise known as their commentary on “inflation and the economic outlook before Parliament’s Treasury Committee.” In addition to that we have U.S Core Durable Goods Orders due at 10.30pm this evening.

AUD EXCHANGE RATES:

AUD/USD – 0.6924

AUD/GBP – 0.5452

AUD/EUR – 0.6090

AUD/NZD – 1.0451

AUD/JPY – 74.298

OTHER MARKETS:

All Ords (XAO) – 6,734

Gold – A$2,039/oz

Silver –  A$22.03/oz

WTI – US$58.72/barrel

DATA RELEASES TODAY:

NZD – Official Cash Rate at Midday

GBP – Inflation Report Hearings at 7.15pm

USD – Core Durable Goods Orders m/m at 10.30pm

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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