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.
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
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
Sign up for a Compass account today and access some of the most competitive rates in the business and arguably the best service.
Senior Corporate FX Dealer
Phone Patrick – 0431 278 632
DISCLOSURE AND DISCLAIMER – GENERAL ADVICE WARNING
The information provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should consider whether our products are appropriate for you and read the FSG and PDS which are available on this website.
This report and must not be copied, either in whole or in part, or distributed to any other person.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.