Tag Archives: AUD

Market Watch

In local markets yesterday, there was little in the way of economic data releases although the fallout from the budget continues as opposition governments vow to block reforms citing a “budget built on lies” however the budget projections have had minimal impact on the markets thus far.

Across US markets yesterday it was another positive day with PPI, CPI, Philly Fed Manufacturing numbers and Unemployment claims all outperforming expectations. PPI figures, released overnight on Wednesday showed that prices have increased by 0.6% against an anticipated 0.2%. CPI data showed growth at 0.3% which is the biggest gain since June 2013 and unemployment claims fell to the lowest level since May 2007. The Philly Fed continued its recent run of form posting the third consecutive outperform with a 15.4 reading against the anticipated 13.9.

In Europe, data continues to disappoint with CPI numbers as expected but well short of the ECB target inflation of 1% Italian GDP actually showed a contraction of 0.1% against an expected gain of 0.2% although Germany outperformed slightly with 0.8% gain against a 0.7% expectation. The continued sluggish growth in the region coupled with ongoing tensions in the Ukraine has given rise to speculation of potential interest rate cuts by the ECB to negative territory or a possible QE program as adopted by the US and UK. The announcement of their next move is expected on 5th June.

Elsewhere tensions continue to rise between Russia and the Ukraine with the Ukraine pushing on with operations to remove separatists from eastern borders. If Russia was to disrupt elections in the Ukraine, the US and other allied forces would impose further sanctions on Russia, already suffering from slower growth as a result of current sanctions.

No local data today but the Chinese Foreign Direct Investment number out at lunchtime might spark some much needed movement. The number, which represents the total investment capital made by foreign enterprises, economic organizations and individuals, above the previous read of 5.5% could see a boost for the Aussie in afternoon trading.

Market Watch

WTI Oil rose to a three week high as government report showed stockpiles fell 592,000 barrels last week and US gasoline demand increased to six month highs. Gold rose to a one week high as mounting political unrest in Ukraine boosted demand for the metal as a safe haven asset.

US stocks fell from all-time highs sending benchmark indexes down from all-time highs as investors resumed selling in small cap and internet shares as company’s earnings were scrutinized. The S&P500 fell 0.50 percent after climbing above 1900 for the first time yesterday.

Yesterday’s trading session saw the Aussie Dollar make a short rally to test April’s highs coming from increased speculation the RBA will raise interest rates later this year. This fuelled more risk appetite buying and drove the market almost 50 points higher. However this was short lived as the overnight session managed to subdue this enthusiasm and we are now trading near yesterday’s open.

Overnight the main market mover was the US Dollar falling against a basket of major currencies for the first time in four days as Treasury yields declined on speculation the ECB will introduce easing measures to boost the EU economy by next month. The Euro slowed its recent selling as traders started to take profits following a solid week of selling waiting for further confirmation from tonight’s European Inflation numbers out of France and Germany.

The Greenback saw a better than expected PPI m/m number coming in at 0.6% compared to a forecast of 0.2%. This is a good indicator of consumer inflation, as this shows that when producers charge more for goods and services that the higher costs tend to be passed on the consumer. The market will be looking at Core CPI, Unemployment Claims and Philly Fed Manufacturing Index data tonight to see movements against the Aussie.

The jigsaw mats market is stable at the moment. There is sufficient supply even though demand is currently high. There continues to be demand from a broad range of users. May will see the arrival of yet another shipment of 40mm jigsaw mats for Ezymats. There is also talk of other thicknesses like 20mm and 300 and a high likelihood of vinyl mats hitting the market.

Foreign Exchange Outlook

The USD index has bounced off its lows, driven by the softer EUR.  The US ten‑year continues to trade near the bottom of its 2014 range.  US retail sales (Tuesday) and a speech by Fed Chair Yellen (Friday) are the US macro highlights.  While US developments may cause some intra‑day volatility near‑term movements in the USD will be driven by ongoing reaction in the EUR to building expectations of future ECB policy easing and geopolitical tensions in the Ukraine.  The USD should be supported near‑term, but over the medium‑term relatively lower US real interest rates and the US’ US$380 billion current account deficit should remain headwinds. 

The Australian Federal Government Budget (Tuesday) is unlikely to have any lasting impact on the AUD.  The budget should help underpin Australia’s AAA sovereign credit rating, at a time the transition in the domestic economy away from mining‑investment led growth is coming through.  Expectations are that the Chinese economy picked up momentum in April (activity data due Tuesday) which should be AUD positive.  It is expectedAUD/USD and selected AUD crosses (particularly AUD/EUR) to remain supported.  

In Australian rates the highlight of the week is the Australian Federal Budget on Tuesday.  A tight budget could lift expectations that the RBA is on hold for longer.  There shouldn’t be a lasting impact in the rates market.  Offshore developments such as tensions in the Ukraine remain a focus and should dominate moves in the long‑end.

Market Watch

A jump in China’s iron ore demand saw a renewal of risk appetite in the financial markets. This helped ASX rise 0.8% to close at 5476, further boosted by a revenue beat and dividend upgrade from NAB. Meanwhile in Europe ECB President Draghi managed to steal the limelight from Fed Chair Janet Yellen.

Mario Draghi indicated a strong signal that the ECB possess a challenge with deflation in the Eurozone and it is prepared to act, commenting that the ECB will adopt some sort of easing measures in June. Testifying to the US Senate, Yellen largely reiterated her previous day’s messages that interest rates are unlikely begin to rise until the economic conditions in US improve further.

Overseas equity markets rallied taking a lead from the Asia on the back of better than expected Chinese Trade balance data. In Asia the Nikkei finished up 0.93% and Hang Seng was up 0.42%. At close all the stock markets in US were up except Nasdaq due to recent crash in Twitter shares.

In commodities space Ukraine tension somewhat subdued demand for gold. The yellow metal traded sideways at $1289/oz while Oil dropped 0.5% to $100.25. Copper got a boost thanks to the Chinese data and traded at $3.08/lb.

The AUD rose to a three week high as job numbers surprised the market adding 14,200 jobs in April, smashing the forecast of 8,800 jobs. The unemployment rate remained firm at 5.80%. Trade figures in China helped improve overall sentiment in the Chinese economy and this carried over to our market, pushing the Aussie Dollar higher. Chinese exports climbed 0.90% in April from last year and imports gained 0.80% leaving a trade surplus of $18.46 billion.

AUD up nearly a cent in late trade

The Australian dollar is up by over $0.0080 in later trade. The 1% rise comes after the RBA kept interest rates on hold. Whilst the Reserve Bank indicated stability in the AUD the general sentiment is that interest rates will rise by the end of the year.

The ABS also reported a continuing trade surplus for Australia. Whilst the surplus was down, record trade with China ensured it stayed in positive territory.

The higher dollar should lead to lower prices for imports including EVA jigsaw mats such as the ones that Ezymats imports.

Overview of the Markets

A week of high impact data concluded on Friday night with the much anticipated Non-Farm Payroll report from the USA. The numbers did not disappoint, as employers boosted payrolls by the most in 2 years and the jobless rate plunged to the lowest since the collapse of Lehman Brothers. The report beat the expected number of 216,000 jobs as it surged to 288,000, the biggest beat since February 2012. Unemployment dropped to 6.3%, the lowest level since September 2008.

The market reaction was swift as the AUD sold off aggressively, only to bounce back within a few hours to levels that we were looking at on Friday afternoon in Sydney. This was attributed to soft wages data, with average hourly earnings, month on month and year on year numbers failing to show improvement.

The situation in Ukraine is still a concern, Barrack Obama says that more severe sanctions will be taken if the destabilisation continues.

This week is heavy on data in Australia, Building Approvals and Chinese Inflation numbers will move the market today, Trade Balance, the Cash Balance and RBA Statement are announced on Tuesday, Retail Sales Wednesday and Employment Data on Thursday. The week is rounded out with the RBA Monetary Policy Statement on Friday, all of which indicates another week of volatility is on the cards.

Britain and China sign RMB pact

Britain and China have signed an agreement to set up a clearing service for RMB trading in London on Monday. The deal comes days after Germany signed a similar deal with the Chinese. The deal allows both countries to trades convertible RMD.

Trade in the Chinese currency is currently restricted to just a few countries. This is part of the reason for friction with some of its trading partners who claim restricted trade in the RMB keeps its value artificially low. The Chinese dispute this rather pointing to a gradually inclusion in global currency markets.

Eymats CEO believes that it is only a matter of time before the RMB is fully convertible thus stream-lining trade between China and it’s trading partners. “I see a gradual loosening of China’s currency trading policy which will see  China increase it’s share  for payments moving past the Swiss Franc which is currently seventh on the scale” says CEO. The American dollar or USD as it is known is the leader of the pack.

Overview of the Markets

In the United States, The Dow Jones industrial average fell 21.97 points, or 0.1 percent, to 16,558.87. The S&P 500 closed 0.1% down to 1,883.68 falling slightly from the previous sessions record highs as data showed an increase in jobless claims before the government’s monthly labor report tomorrow.

In commodities news the price of Gold dropped 0.96% to $1,283.40 USD/t oz, with Silver dropping 0.67% to $19.05 USD/t oz. Crude Oil also fell by 32cents to $99.42 a barrel for June delivery as Crude stockpiles continue to grow gaining 1.7 million barrels last week to 399.4 million, the most since the Energy Information Administration began reporting weekly data in 1982.

May started with a 0.1% decline.  The AUD has fallen in May in 7 of the last 9 years. In the last 4 years the Aussie has given up 7%, 3%, 9% and 7% respectively over the course of the month with ranges of up to 13% from top to bottom.

AUD Report

 With no significant data releases domestically this week  the AUD continues to be stuck in its 50 point weekly trading range against most of the majors.

Today saw the Chinese HSBC Manufacturing numbers at 11.45am for the which were positive.  That and the negative data out of the US pushed the dollar higher before it came down again. It is expected to remain stable in the short-term.

Markets Overview

In local stock markets the ASX200 finished higher with the local big 4-banks leading the charge with the benchmark index holding above the 5,500 level. The slow performer yesterday was the mining sector which saw some of the larger players such as BHP and Rio Tinto lose some ground.

In overseas markets we saw some big news in European stocks with US pharmaceutical giant Pfizer offering a merger deal with British competitor AstraZeneca. This news coupled with strong performances from other European pharmaceutical giants has seen the industry lift most of the major Euro indexes in overnight trading.

The US stock market saw some steady gains off the back of the Pfizer news and some strong performances from the tech sector but was hampered by a slide from Bank of America shares with news they are suspending dividend and buybacks.

In commodities news we have seen a slight drop in Aluminium and Copper on the London Metals Exchange while traders have started to make a move back to Gold amid rising tensions in Ukraine.

USD

A quiet day yesterday against the USD, a little bit of movement over night with a better than expected pending home sales. The main piece of economic data this week is the employment report on Friday. We may see a little movement this today with consumer confidence steady.