Market Update – 31st August 2018 – AUD, Commodities & Equities Take A Hit As More China Tariffs Loom

The AUD has taken another dip overnight as geopolitical concerns caused widespread selloffs across commodities, stocks and risk assets more broadly. Specifically, it appears as though Trump is planning to go ahead with US$200 billion in tariffs on Chinese imports as early as next week, which is more than likely to see China retaliate with in kind tariffs. Trade war escalation helps no one and as a result U.S & European equities finished lower with the DOW and German DAX taking the biggest hits down around half a percent in overnight trade. The AUD is lower by around half a percent as fears the Trump Tariffs will impact Chinese growth.

So what can I say in relation to all of this and the AUD?

Well, first of all markets typically over-react on fears and it’s not really surprising to see a commodities/AUD sell off overnight following news of more tariffs – we’ve been here before. However global growth is still happening around the world including in China – our largest trading partner. Additionally our commodities, iron ore, copper and more recently lithium will continue to be sold to China as they develop their infrastructure, electric vehicles market and build the bridges, rail lines, ports and highways that make up the One Belt, One Road gigantic infrastructure project. All of this is supportive of the AUD in the long term. I’ll leave at that, have a great weekend!

AUD EXCHANGE RATES:

AUD/USD – 0.7235

AUD/GBP – 0.5552

AUD/EUR – 0.6197

AUD/NZD – 1.0881

AUD/JPY – 80.461

USD/BTC – $6,924

OTHER MARKETS: 

All Ords (XAO) – 6,460

Gold – A$1,651/oz

Silver –  A$20.02/oz

WTI – US$69.87/barrel

DATA RELEASES TODAY:

No economic data today.

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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