Market Update – 7th March 2019 – AUD Gets Whacked As GDP Per Capita Enters Recession

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.

AUD Nosedives:

Quite a boil over for the Aussie Dollar overnight with a raft of poor data this week putting the Aussie Dollar well and truly on the back foot once again. AUD vs. the EURO, USD and GBP is down around 0.75% since yesterday while AUD/JPY is off closer to 1% as U.S and European stocks faltered and data yesterday showed we have entered a GDP per capita recession “GDP per person dropped 0.2 per cent, the second consecutive fall in the widely used measure. It was only the third per-capita GDP recession since 1991.” Household spending has also been weak, with retail sales struggling while new car sales have continued to decline as a result of the negative wealth effect from lower house prices – all this points to lower interest rates or some stimulus down the track if things continue to worsen. The shining light right now is once again our commodities sector which is benefiting from a low AUD and supply deficits in almost all base metals.

Retails Sales Out:

Ahead this morning is further local economic data in Retail Sales at 11.30am. Retail sales have been poor over the past few years so I wouldn’t expect a turnaround just yet for the above-mentioned reasons, however we will be watching the data closely. Growth in retail sales is expected to come in around 0.3%.

The ECB decides on Interest Rates later this evening, forecasts are for no change to their rates which stand at 0.00%.

AUD EXCHANGE RATES:

AUD/USD – 0.6997

AUD/GBP – 0.5303

AUD/EUR – 0.6185

AUD/NZD – 1.0353

AUD/JPY – 78.26

OTHER MARKETS:

All Ords (XAO) – 6,326

Gold – A$1,830/oz

Silver –  A$21.46/oz

WTI – US$56.41/barrel

DATA RELEASES TODAY:

AUD – Retail Sales m/m at 11.30am

AUD – Trade Balance at 11.30am

EUR – Monetary Policy Statement & Main Refinancing Rate at 11.45pm

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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