Market Update – 9th July 2019 – AUD Slips Marginally As DB Axes 20,000 Jobs

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 Slips Again:

The AUD is off around 0.1% across the board with the exception of AUD/JPY which made a very small gain over the past 24 hours. U.S and European equities dipped again in the first session of the week as Deutsche Bank’s (DB) ‘restructuring’ sent some shock-waves through the banking sector and markets more broadly. DB plan to axe around 20,000 jobs globally in a bid to stave off bankruptcy, however as yet all previous restructures have been a fruitless exercise. GFC era debt appears to be finally taking a toll on DB and its share price, which last traded at EUR 6.79, way off the high of around EUR 108 in May 2007.

DB Restructure: 

DB could be seen as a bit of a canary in the coal mine especially with equities near record highs, growth slowing across the globe and central banks cutting interest rates. Lower interest rates in places like the U.S, UK and Europe will certainly offset any further declines in AUD/USD and the other crosses, however another recession could see the AUD sharply lower and certainly something to keep in mind as prudent importers and exporters.

AUD Lows During GFC:

The low for AUD/USD during the last downturn (the GFC) was just on 0.6000, while AUD/EUR hit an all time low of around 0.4900. I say this not to scare but to understand what happens to the AUD during global recessions. The AUD is a risk asset like equities and commodities and does get sold off during these times. I’m not expecting a recession tomorrow, however it’s good to be prudent, Forward Contracts are prudent.

NAB Business Confidence is released this morning, followed by a speech from Powell later this evening.

AUD EXCHANGE RATES:

AUD/USD – 0.6943

AUD/GBP – 0.5539

AUD/EUR – 0.6186

AUD/NZD – 1.0490

AUD/JPY – 75.525

OTHER MARKETS:

All Ords (XAO) – 6,757

Gold – A$2,001/oz

Silver –  A$21.55/oz

WTI – US$57.61/barrel

DATA RELEASES TODAY:

AUD – NAB Business Confidence at 11.30am

USD – Fed Chair Powell Speaks at 10.45pm

Sign up for a Compass account today and access some of the most competitive rates in the business and arguably the best service.

 

{{cta(‘b4d1fdf3-9b81-4df4-87c2-23257194f470’)}} 

Patrick's Signature-802090-edited.jpg

Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

  {{cta(’22fd720b-8ddc-4846-85e4-6ab59d459f68′)}}

CompassFB-1

 DISCLOSURE AND DISCLAIMER – GENERAL ADVICE WARNING
The information provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should consider whether our products are appropriate for you and read the FSG and PDS which are available on this website.
This report and must not be copied, either in whole or in part, or distributed to any other person.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.

Leave a Reply

Your email address will not be published.