Tag Archives: USD

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.

AUD still holding up despite pressure

The AUD failed to break to the upside on Tuesday, as the RBA minutes simply reiterated their neutral stance and echoed last month’s statement. The AUD is still “too high historically”, but not enough was said to effect the markets in either direction in Australia trading hours. Overnight the AUD fell vs the USD, EURO and other majors, in anticipation of today’s major releases out of China, and the fact that China’s money supply grew at the slowest pace on record. China GDP numbers are due today and are forecast to drop to 7.4%, anything lower could hurt the AUD. This time 12 months ago the AUD began a dramatic fall that lasted until June, the short-term will be key to the medium term AUD levels.