Market Update – 31st July 2019 – Volatility Increases As We Head Into U.S Fed Meeting Tonight

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.

Overnight:

Data released overnight showed an improvement in U.S Consumer confidence and home sales but that didn’t help U.S stocks which lost ground as a result of continued fractured trade negotiations between China and President Trump. The trade war that never end, along with a mixed bag of U.S reporting and a low AUD also gave support to Gold prices with the yellow metal up about 400AUD since late September from $1,600 to just over $2,000 an ounce in AUD terms.

It’s All About Data:

It’s all about data again today and tonight, with the release of Chinese Manufacturing PMI this morning followed by Aussie CPI figures which are due at 11.30am. Australian quarterly CPI is expected to come in around half a percent which would be a massive improvement on last quarters reading of zero percent. Still at 0.5%, which is 2% annualised, that puts economic growth teetering on the edge of the RBA’s aspirational target range of between 2-3 percent.

Later this evening we will see preliminary U.S jobs numbers followed by the all important U.S Fed Funds Rate and FOMC Statement. Expectations are high that the U.S Fed will do Trump’s bidding and lower the cash rate by a quarter percent from 2.5% to 2.25%. As a result of these assumptions of a rate cut from the Fed, expect volatility tonight and perhaps even a stock market rally if Jerome Powell is bearish enough and throws in a few comments that suggest further rate cuts or stimulus are on the cards.

AUD Movers: 

AUD/USD fell another half percent overnight, while the other AUD crosses were somewhat mixed. More volatility is expected over the next 24 hours, tread with caution.

AUD EXCHANGE RATES:

AUD/USD – 0.6842

AUD/GBP – 0.5624

AUD/EUR – 0.6130

AUD/NZD – 1.0360

AUD/JPY – 74.333

OTHER MARKETS:

All Ords (XAO) – 6,928

Gold – A$2,081/oz

Silver –  A$24.09/oz

WTI – US$58.29/barrel

DATA RELEASES TODAY:

CNY – Manufacturing PMI at 11.00am

AUD – CPI q/q at 11.30am

USD – Prelim ADP Non-Farm Payrolls at 10.15pm

USD – Federal Funds Rate at 4.00am

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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