Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD consolidation – with upside risks – is this week’s main currency theme. The USD would lift if the US administration releases sufficient details on its tax reform plan that has a chance of being passed into law.  Media reports suggest Trump will unveil a corporate tax rate of 20% and a $US 1.5 trillion tax cut over a decade.  However, the release of the tax package has been delayed several times and we are sceptical much detail will be released.  The other big event will be a speech by FOMC chair Yellen on inflation and monetary policy.  Market participants will look for her views on the recent decrease in inflation.
  • AUD/USD will take its cue from the USD this week in the absence of major Australian economic data. So far AUD has been resilient to the significant fall in the iron ore price because markets have revised upwards expectations for RBA tightening in 2018.


Overnight Data:

  • German Chancellor Angela Merkel’s CDU/CSU party will form a coalition government despite suffering a near 9‑point fall in its share of the votes. In New Zealand, the National Party Government has taken the most seats in Saturday’s election and is likely to form a coalition with the NZ First Party. The US Markit manufacturing index rose from 52.8 to 53.0 as expected in September. The services gauge fell from 56.0 to 55.1 in September (forecast 55.9).


Global Equity Markets:                                                                                                                  

  • Mainland European share markets were flat ahead of German elections. Investors also watched continued tensions between North Korea and the US. The STOXX 600 rose by 0.1% while the German Dax eased by 0.1%. But the UK FTSE rose by 0.6%. In London trade, shares in Rio Tinto rose by 1.0% while BHP rose by 0.1%.
  • US share markets ended flat as investors digested a raft of issues. Technology shares ended little‑changed. The Dow Jones fell by almost 10 points or less than 0.1%. The S&P 500 rose by 2 points or 0.1%. The Nasdaq rose by 4 points or 0.1%. Over the week the Dow rose 0.4%, S&P 500 rose 0.1% and the Nasdaq rose by 0.3%.



  • Global oil prices rose on Friday despite major oil producers delaying a decision on whether to extend output cuts. Brent crude rose by US43 cents or 0.8% to US$56.86 a barrel. US Nymex rose by US11 cents or 0.3% to US$50.66 a barrel. Over the week Brent rose by US$1.24 or 2.2% and Nymex rose by US77 cents or 1.5%.
  • Base metal prices fell by between 0.4‑5.4% on the London Metal Exchange with nickel down the most while copper fell the least. But tin bucked the trend, up by 0.8%. Over the week metals were mixed with lead up 6.6% and nickel down 6.1%.
  • The December Comex gold futures price rose by US$2.70 or 0.2% to US$1,297.50 per ounce. The spot gold price was trading around US$1,297 an ounce in late US trade. Over the week gold fell by US$27.70 or 2.1%. Iron ore fell by US10 cents or 0.2% to US$62.90 a tonne. Over the week iron ore fell by US$8.00 or 11.3%



  • In Australia, no major data is released
  • In the US the national activity index is released.


Indicative Rates (Bank to Sell):

AUD / USD 0.7902 AUD / CAD 0.9676 USD / JPY 112.14
AUD / JPY 88.26 AUD / THB 25.42 GBP / USD 1.3494
AUD / EUR 0.6620 AUD / HKD 6.1125 NZD / USD 0.7317
AUD / GBP 0.5832 AUD / SGD 1.0642 NZD / EUR 0.6143
AUD / NZD 1.0785 AUD / FJD 1.5996 AUD / CNY 5.2090
AUD / CHF 0.7524 AUD / PGK 2.5073 All Ordinaries 5740.57
AUD / DKK 4.9144 EUR / USD 1.1761 Gold $US/oz 1297.78
AUD / SEK 6.3091 EUR / GBP 0.8827 Oil WTC $/b 50.28



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