Market Update – 31st July 2018 – AUD Pretty Flat While Overpriced U.S Tech Stocks Cop A Beating

The Aussie dollar was mixed overnight, moving marginally higher vs. the Japanese Yen and U.S Dollar but falling vs. the Euro and Pound as volatility remains a hall mark of financial markets in 2018. Equities and commodities fared worse with losses occurring pretty much across the board – the tech heavy NASDAQ continued it’s poor form over the past week down 1.5% overnight as massively overpriced tech stocks led by the so called “FAANG’s” copped a beating. Some of these tech stocks are as one value investor put it ‘priced to perfection’ meaning even the slightest hint of a guidance miss or marginally slower growth will see the stock price belted – it’s also important to note that many of the FAANG stocks and other associated tech stocks are priced at exceptionally/historically/insanely high price to sales ratio’s…so my very general advice would be to act with caution if you’re keen on investing in the tech space, particularly in the U.S.

Iron ore which is our number 1 commodity export is holding up quite nicely and it’s correlation with the AUD remains in tact helping to support the local currency.

Ahead today is local Building Approvals number and Private Sector Credit. Whilst both are not classified as traditional tier 1 type data they do provide some impetus for the future direction of the Aussie dollar in that falling building approvals and slower private sector credit may mean interest rates are held lower for longer.

AUD EXCHANGE RATES:

AUD/USD – 0.7388

AUD/GBP – 0.5611

AUD/EUR – 0.6307

AUD/NZD – 1.0832

AUD/JPY – 82.05

USD/BTC – $8,159

OTHER MARKETS: 

All Ords (XAO) – 6,368

Gold – A$1,649/oz

Silver –  A$20.91/oz

WTI – US$69.57/barrel

DATA RELEASES TODAY:

AUD – Building Approvals at 11.30am

AUD – Private Sector Credit at 11.30am

USD – CB Consumer Confidence at midnight