Market Update – 8th March 2019 – AUD Continues Declines With Poor Retail Sales

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.

Retail Sales Disappoint: 

More poor local economic data released yesterday put further downward pressure on the Aussie Dollar with the latest retail sales figures showing a very lacklustre 0.1% increase in month on month sales. Department stores again fielded the brunt of declines off 0.4%, while food retailing and spending at cafe & restaurants grew 0.3% and 0.2% respectively. AUD/USD is off around 10-15 points since yesterday and is nearly 2 cents lower than in late Feb.

Rate Cut Likely: 

All the data now seem to point to a rate cut from the RBA as opposed to a rate hike, which unfortunately probably also means a lower AUD. How low will we go? Well I’m not a big fan of making long dated forecasts as the book “Future Babble” paints a pretty bleak picture of expert predictions, but I can provide a basic range and suggest something like 0.6500 to the downside and 0.7500 on the upside over the next 12-24 months is certainly possible. Which means for importers, if we get an opportunity to lock something in around 0.72-0.75 then it would be wise to hedge some of your exposures. The key here is not being greedy, greed always ends in tears.

Exporters really can sit back and relax I think given the way the AUD is travelling and the way local data has been performing.

US Non-Farms Due: 

Ahead tonight is U.S non farm employment numbers which is as I say every month a crucial data event. AUD could fall under further pressure tonight if employment numbers are strong and vice versa.

AUD EXCHANGE RATES:

AUD/USD – 0.6979

AUD/GBP – 0.5332

AUD/EUR – 0.6237

AUD/NZD – 1.0357

AUD/JPY – 78.000

OTHER MARKETS:

All Ords (XAO) – 6,344

Gold – A$1,833/oz

Silver –  A$21.43/oz

WTI – US$56.74/barrel

DATA RELEASES TODAY:

CNY – Trade Balance Figures around lunchtime

USD – Non-Farm Employment Change & Unemployment Rate at 12.30am (tomorrow morning)

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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