Market Update – 9th August 2019 – AUD Makes Gains As Equities & Commodity Prices Surge

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 Gains:

The AUD is up as much as half a percent since yesterday morning thanks to a bullish finish for U.S and European equities. The Nasdaq and French CAC were the standouts, up more than 2.25% overnight, while the S&P500 and Euro Stoxx 50 finished up around 1.9%. Commodities also performed well, with Copper and Zinc both adding about US$50 a tonne. Not surprisingly the safe haven of Gold retreated, but Gold has a new shine and should continue to perform well over the coming year as we enter the later stages of this current economic cycle.

China Stabilises Currency:

The reason for much of the tension and weakness in global markets this week and late last week was the sudden and dramatic weakening of the Chinese Yuan vs particularly the Greenback but right across the board. The weakening of the Yuan was a direct counter effort from China to combat sweeping tariffs put in place by the Trump administration. Unfortunately though, it was seen as escalating the tensions and so China’s move to stabilise the currency over the past 24 hours, along with what appears to be a more conciliatory tone, suggests Trump and China might be prepared to head back to the negotiating table.

U.K Economic Data: 

A bit of U.K economic data is due out this evening in GDP and manufacturing production with both sets of data expected to show further weakness. Quarterly GDP growth is expected to come in at nil, which would be the weakest reading since early 2013, while manufacturing production is tipped to have contracted by 0.1%. It appears some tough times are still ahead for the U.K and Boris Johnson, who appears hell bent on delivering Brexit in October, deal or no deal. Of all the major AUD crosses, AUD/GBP has held up the best thanks to the ever shifting political landscape in the U.K and uncertainty around Brexit. AUD/GBP might get another boost tonight if the data is particularly poor.

AUD EXCHANGE RATES:

AUD/USD – 0.6755

AUD/GBP – 0.5550

AUD/EUR – 0.6030

AUD/NZD – 1.0456

AUD/JPY – 71.498

OTHER MARKETS:

All Ords (XAO) – 6,642

Gold – A$2,206/oz

Silver –  A$24.90/oz

WTI – US$52.84/barrel

DATA RELEASES TODAY:

AUD – RBA Gov Lowe Speaks at 9.30am

GBP – GDP & Manufacturing Production at 6.30pm

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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