Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD pared back some of its recent gains overnight. In our view, USD will continue to trade on the defensive until we have more details on the proposed tax reform impact on U.S. fiscal policy and foreign capital flows to the U.S. Also, the legislative process to get tax reform passed by Congress will most likely take some time. The U.S. core PCE deflator is the next USD focus (10:30pm Sydney). In line with consensus, we expect the core PCE deflator (the Fed’s favourite measure of inflation) to remain muted near 1.4%pa in August. Soft U.S. inflation pressure will continue to weigh on US interest rate futures and the USD.
  • AUD/USD rose overnight on broad-based USD weakness. Comments by RBA Deputy Guy Governor Debelle did not materially impact AUD. Debelle discussed central bank independence and financial stability. Debelle did not talk about monetary policy or Australia’s economic outlook. Today, AUD will largely ignore the release of Australia’s August private sector credit report (11:30am Sydney). Instead, AUD/USD will continue to be guided by the performance of iron ore prices and the USD.


Overnight Data:

  • US June quarter GDP (final) grew at a 3.1% annualised pace (forecast 3.0%).  New claims for unemployment insurance rose by 13k to 272k in the latest week (forecast 270k).  The “advance” goods trade deficit eased from US$64 to US$63bn in August.


Global Equity Markets:                                                                                                                  

  • European share markets rose modestly on Thursday with investors assessing whether the US Congress was likely to approve the President’s tax plans. Swedish retailer H&M fell by 5.1% after reporting a 20% fall in quarterly profit. Shares in discount airline Ryanair fell by 3.5% after it scrapped a bid for Alitalia.  The STOXX 600 lifted by 0.1% while the German Dax rose by 0.4% and the UK FTSE edged up by 0.1%. In London trade, shares in Rio Tinto fell by 0.2% while BHP fell by 0.6%.
  • US share markets rose moderately on Thursday.  Investors mulled the latest tax reform plans from the White House as well as the latest economic data.  Shares in fast food giant McDonalds rose by 2.2% on a broker upgrade.  And the healthcare sector was amongst the strongest gainers.  The Dow Jones index rose by 40.5 points or 0.2% after being up 54 points. The S&P 500 was up by 0.1% to record highs and the Nasdaq rose by 0.2 points or less than 0.1%.



  • Global oil prices eased on Thursday as investors took profits on recent gains.  Traders are watching the situation between Turkey and Iraq. Iraqi Kurdistan has voted overwhelmingly in favour of independence and in response, Turkey has vowed to close the oil pipeline in the region.  Brent crude fell by US49 cents or 0.8% to US$57.41 a barrel.  US Nymex fell by US58 cents or 1.1% to US$51.56 a barrel.
  • Base metal prices rose by up to 2% on the London Metal Exchange with nickel doing the best. But tin bucked the trend, down by 0.7%.  The December Comex gold futures price rose by US90 cents or 0.1% to US$1,288.70 per ounce.  The spot gold price was trading around US$1,286 an ounce in late US trade. Iron ore fell by US10 cents or 0.2% to US$62.70 a tonne.



  • In Australia, RBA credit data and detailed household spending figures are released.
  • In the US, personal income and spending figures are released with final consumer sentiment data for September.
  • In China on Saturday the purchasing manager surveys for manufacturing and services sectors are released.


Indicative Rates (Bank to Sell):

AUD / USD 0.7805 AUD / CAD 0.9625 USD / JPY 112.29
AUD / JPY 87.25 AUD / THB 25.32 GBP / USD 1.3441
AUD / EUR 0.6606 AUD / HKD 6.0357 NZD / USD 0.7233
AUD / GBP 0.5781 AUD / SGD 1.0587 NZD / EUR 0.6137
AUD / NZD 1.0773 AUD / FJD 1.5903 AUD / CNY 5.1994
AUD / CHF 0.7419 AUD / PGK 2.4744 All Ordinaries 5731.54
AUD / DKK 4.9056 EUR / USD 1.1635 Gold $US/oz 1287.68
AUD / SEK 6.3167 EUR / GBP 0.8768 Oil WTC $/b 51.57



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