Market Update – 4th September 2018 – AUD Makes Small Gains Ahead Of RBA Rate Decision At 2.30PM

Thankfully for importers, the Aussie Dollar has made some gains overnight.

Albeit small gains it is a step in the right direction following a pretty severe late winter sell off. The AUD finished up around 1/2 to 3/4 of one percent vs the Greenback, Pound, Euro, Kiwi and Japanese Yen. Interestingly Bitcoin has been on the rise over the past fortnight and is now trading around US$7,200 per Bitcoin; for those interested it appears to have a ton of support every time it hits around US$5,800-US$5,900. Not advice to buy, just an observation!

Retail sales and ANZ jobs ads came in flat and negative respectively yesterday morning while company operating profits rose by 2% for the latest quarterly reading. The data had little impact on the AUD, however retail stocks like Harvey Norman and Myer fell on the ASX as investors feared retail may be truly dead. However as with all things retail is simply a cyclical market with peaks and troughs and not dissimilar to the commodities market, property  market and everything else.

We have the all important cash rate decision today at 2.30pm, however don’t expect any move on rates from their current level of 1.5%. The RBA has had interest rates stuck at 1.5% since August of 2016 and for all intents and purposes it looks unlikely to change from these levels for the foreseeable future as a result of Trump’s trade war with China, slow wages growth and a weak retail sales and housing market. Most forecasters aren’t predicting a move until sometime next year, however for mortgage holders don’t think this doesn’t mean rates aren’t heading higher…Westpac proved this during last week with a 0.14% rate hike and the other banks are likely to follow this week or next. Funding costs are after all heading higher for the banks as interest rates move higher from historic lows in Europe and the U.S where they get a large chunk of their liquidity.

AUD EXCHANGE RATES:

AUD/USD – 0.7181

AUD/GBP – 0.5570

AUD/EUR – 0.6176

AUD/NZD – 1.0892

AUD/JPY – 79.816

USD/BTC – $7,263

OTHER MARKETS: 

All Ords (XAO) – 6,416

Gold – A$1,665/oz

Silver –  A$20.11/oz

WTI – US$69.84/barrel

DATA RELEASES TODAY:

AUD – RBA Cash Rate at 2.30pm

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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