5th September 2016 – Weekly Currency Market Report.



The Market in Brief:

                          • US markets are closed today (Monday) for Labour Day holiday.
                          • Friday night’s US employment data disappointed with August non-farm payrolls rising less than expected 150k (forecast 180k). July was revised higher from 255k to 275k & June was revised lower from 292k to 271k. The monthly jobs growth rate is 182k so far this year. Unemployment rate was steady at 4.9% & participation rate of 62.8%.
                          • The US economy is near full employment & inflation is slowly rising.
                          • The odds of a US September interest rate rise has fallen from 40% to 15% & pricing for a hike in December is currently at 60%. We maintain the stance for no US rate hikes until Dec 2016 / early 2017!
                          • Aussie Dollar remains firm above 75 US cents and should be well supprted with Australia’s Q2 GDP data this Wednesday to confirm annual economic growth above 3%.
                          • The global volatility index (VIX) has fallen 12% last week from 13.65 to 11.98.

Market Events Due:

                        • AU Q2 corporate profits (today); RBA Meeting (Tue); Q2 balance of payments (Tue); Q2 GDP (Wed); Jul trade balance (Thu); Jul housing finance (Fri); RBA Speaker: Lowe (Thu).
                        • CH Aug trade balance (Thu); Aug CPI (Fri).
                        • NZ Global Dairy Trade auction (Wed); Q2 manufacturing sales (Wed).
                        • JP Jul balance of payments (Thu); BoJ speakers: Kuroda (Mon), Nakaso (Thu).
                        • US Aug ISM non-manufacturing (Wed); Fed Beige Book (Thu); FOMC speakers: non-voter Williams (Thu), voter Rosengren (Fri)
                        • EU Jul retail sales (tonight); ECB Meeting (Thu). ECB speaker: Draghi (Thu).
                        • UK Aug services & composite PMI’s (tonight); Jul industrial & manufacturing production (Wed); Jul trade balance (Fri). BoE speakers: Cunliffe, Carney, Forbes, McCafferty (Wed).
                        • CA BoC meeting (Wed); Aug employment (Fri). BoC speaker: Lane (Fri).

REFERRALS: Client referrals are a very important part of our business. If you know of any contacts that could benefit from our comprehensive range of international currency transfer services, please do let me know. 

The weekend G20 meeting in China has just ended. US President Obama sent a warning to UK’s new Prime Minister Theresa May that the US wants to focus on trade negotiations with the EU and a bloc of pacific nations (including Australia) before considering a deal with the UK. 

AUD/JPY has appreciated another 2.2% last week on USD strength against the Yen and expectations of further BoJ monetary policy easing in coming weeks.

The Sterling Pound (GBP) is the best performing currency, up 1.3% last week as the post-BREXIT squeeze continues and excessive GBP short positions are squared with doubts lingering on further BoE rate cuts for now.

AUD/EUR has firmed another 1% towards 0.68 level on higher US and European equity markets. Thursday’s ECB meeting will be in focus awaiting further dovish rhetoric, which should keep the EUR weak.

AUD/NZD as expected breached the 1.0360 support level from last July. This provides a great opportunity for those who need to sell NZD & buy AUD.

Compass Global Markets Team.



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