Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD receives no meaningful support from Trump starting a public campaign to garner support for tax reform.  In fact, comments by US Treasury secretary Mnuchin suggest the prior aim of cutting the corporate tax rate to 15% (from up to 39%) is unlikely to be achieved.  We expect market participants to largely ignore the tax reform push until greater detail of the proposals are released and it looks likely legislation can be passed by both house of Congress.

US producer prices are the highlight today (10.30pm Sydney).  The PPI will be the first ‘hard’ data to show some impact from the hurricanes battering the US south. There are upside risks to PPI because the disruption to oil production has lifted petrol prices.

  • AUD/USD has consolidated despite a $1.88 lift in the iron ore price.  With only Australian consumer confidence released today (10.30am Sydney), AUD will likely consolidate today.  Tomorrow will be a bigger day for AUD with the release of the August labour force report.

 

Overnight Data:

  • In US economic data, the JOLTS survey of job openings rose from 6.116 million to 6.17m in July. The National Federation of Independent Business (NFIB) business optimism index rose from 105.2 to 105.3 in August. And chain store sales in the latest week were 4.5% higher on a year ago, ahead of the 4.4% annual gain in the previous week.

 

Global Equity Markets:                                                                                                                  

  • European sharemarkets were generally stronger on Tuesday. The Euro STOXX 600 banks index rose by 1.6% with the financial services index up 1.1%. But the UK market was weighed down by losses for home builders on concerns about the outlook for the sector. The Euro STOXX 600 index rose by 0.55%, with the German Dax up by 0.4% but the UK FTSE eased by 0.2%.
  • US sharemarkets posted modest gains on Tuesday. The telecom services sector and financials led the gains while utilities and real estate sectors fell. Shares in Apple fell by 0.4% in response to the release of the new iPhone X device but after lifting 1.8% on Monday. The Dow Jones index rose by 61.5 points or 0.3% after being up 77 points in early trade. The S&P 500 rose by 0.3% to record highs while the Nasdaq rose by 22 points or 0.3%.

 

Commodities:                                                                                         

  • Global oil prices rose on Tuesday. The Organisation of Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand in its latest monthly report. OPEC also estimated that recent hurricanes would have only a “negligible” effect on demand. Output by OPEC’s 14 member countries fell by 79,000 barrels per day (bpd) to 32.76 million bpd in August. Brent crude rose by US43c or 0.8% to US$54.27 a barrel. US Nymex rose by US16c or 0.3% to US$48.23 a barrel.
  • Base metal prices were mixed on the London Metal Exchange on Tuesday. Lead, nickel and aluminium rose up to 1.8% with nickel up the most. Other metals fell up to 1.5%, led by copper. The December Comex gold futures price fell by US$3.00 or 0.2% to US$1,332.70 per ounce. The spot gold price was trading around US$1,331 an ounce in late US trade. Iron ore rose by US60 cents to US$74.20 a tonne.

 

Ahead:

  • In Australia, monthly consumer confidence data is released with the household expenditure survey and data on household income.
  • In the US, the producer price index is released with the August budget figures and weekly mortgage finance data.

 

Indicative Rates (Bank to Sell):

AUD / USD 0.7970 AUD / CAD 0.9629 USD / JPY 110.12
AUD / JPY 87.37 AUD / THB 25.67 GBP / USD 1.3282
AUD / EUR 0.6644 AUD / HKD 6.1648 NZD / USD 0.7287
AUD / GBP 0.5975 AUD / SGD 1.0723 NZD / EUR 0.6091
AUD / NZD 1.0919 AUD / FJD 1.6081 AUD / CNY 5.2085
AUD / CHF 0.7500 AUD / PGK 2.5200 All Ordinaries 5806.39
AUD / DKK 4.9337 EUR / USD 1.1814 Gold $US/oz 1332.34
AUD / SEK 6.3393 EUR / GBP 0.9008 Oil WTC $/b 48.16

 

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