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 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
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
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Senior Corporate FX Dealer
Phone Patrick – 0431 278 632
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