Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD rose against most major currencies overnight to near a one month high. Expectations the Trump administration and senior Republican lawmakers in Congress will unveil a stimulative tax reform plan over the next 24hrs is supporting a firmer USD. President Trump noted overnight the planned tax reform measures will cut taxes “tremendously” for the middle class, lower the corporate tax rate and bring back trillions of dollars invested overseas. We will have a better indication of whether tax reform will be possible to implement by year-end when the details of the tax plan are released. Stay tuned…

USD was volatile following Fed Chair Janet Yellen’s speech earlier this morning. Yellen reiterated that “gradual approach [to fed funds rate hikes]is particularly appropriate in light of subdued inflation and a low neutral real interest rate”. But Yellen warned, “we should also be wary of moving too gradually”.

  • AUD/USD fell overnight on USD strength. There is no policy-relevant Australian economic data release this week, so AUD will continue to be driven by the performance in USD and iron ore prices. By year-end, we still expect AUD/USD to trade closer to 0.8000. Australia’s higher terms of trade, the structural improvement in Australia’s current account deficit, and positive real interest rates spread between Australia and the U.S. favour a higher AUD/USD.


Overnight Data:

  • US consumer confidence fell from 120.4 to 119.8 in September (forecast 120.0). The Case Shiller measure of 20 capital city home prices rose by 0.3% and 5.8%pa in July. New home sales fell by 3.4% to an annualised rate of 560k in August.
  • US Federal Reserve Chair Janet Yellen spoke overnight. Yellen clearly indicated that the central bank needs to continue with gradual rate hikes. And it “would be imprudent to keep monetary policy on hold until inflation is back to 2%.” A December rate hike is likely.


Global Equity Markets:                                                                                                                  

  • European share markets were again mixed on Tuesday. Oil stocks rose in response to the higher crude prices of recent days. The STOXX 600 ended broadly flat while the German Dax rose by 0.1% and the UK FTSE fell by 0.2%. In London trade, shares in Rio Tinto fell by 0.6% while BHP fell by 0.8%.
  • US share markets ended mixed on Tuesday. Technology stocks rebounded after recent losses. Shares in Apple rose by 1.7%. And investors concluded from the speech by Janet Yellen that the Federal Reserve was still on course to lift rates in December. The Dow Jones index fell by 12 points or 0.1% after trading in a 90‑point range. The S&P 500 rose by less than 0.1% and the Nasdaq lifted by 9.6 points or 0.2%.



  • Global oil prices fell from 26‑month highs on Tuesday as investors decided to book profits on recent gains. Investors awaited the weekly US inventory data with traders expecting a lift in crude stocks for a fourth week. Brent crude fell by US58 cents or 1.0% to US$58.44/bbl. US Nymex fell by US34 cents or 0.7% to US$51.88/bbl.
  • Base metal prices were mixed on the London Metal Exchange. Lead and zinc rose by around 0.3% but other metals fell by up to 1.1% with aluminium leading the way lower. The December Comex gold futures price fell by US$9.80 or 0.7% to US$1,301.70 per ounce. The spot gold price was trading around US$1,295 an ounce in late US trade. Iron ore rose by US60 cents or 0.9% to US$64.00 a tonne.



  • In Australia, population data is released.
  • In the US, data on durable goods orders is released with pending home sales.


Indicative Rates (Bank to Sell):

AUD / USD 0.7839 AUD / CAD 0.9601 USD / JPY 112.25
AUD / JPY 87.60 AUD / THB 25.29 GBP / USD 1.3458
AUD / EUR 0.6631 AUD / HKD 6.0627 NZD / USD 0.7210
AUD / GBP 0.5799 AUD / SGD 1.0606 NZD / EUR 0.6114
AUD / NZD 1.0855 AUD / FJD 1.5967 AUD / CNY 5.2047
AUD / CHF 0.7441 AUD / PGK 2.4856 All Ordinaries 5729.61
AUD / DKK 4.9229 EUR / USD 1.1642 Gold $US/oz 1294.28
AUD / SEK 6.3486 EUR / GBP 0.8762 Oil WTC $/b 51.58



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