Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD fell across the board during the overnight trading session and U.S. 10‑year Treasury yields dipped 2bps to 2.339%. Doubts the Trump administration can implement an aggressive fiscal stimulus platform in part because the President’s dispute with a key Republican lawmaker (Senator Bob Corker) appears to be undermining USD. President Trump even had to deny that his dispute with Senator Corker would affect tax reform. Thursday’s FOMC September meeting minutes is the next USD focus. We expect the minutes to reinforce the case for a December Fed funds rate hike which is USD supportive. December Fed funds futures already imply an 80% probability of a 25bps Fed funds rate increase.
  • AUD/USD consolidated within a tight range overnight. The IMF’s more upbeat global economic outlook bodes well for commodity prices and AUD. In its October World Economic Outlook, the IMF expects the world economy to grow by 3.6% in 2017 and 3.7% in 2018. This is 0.1% higher in both years than in the April and July forecasts. For China, the IMF raised the 2017 and 2018 GDP forecasts by 0.1% in both years to 6.8% and 6.5% respectively. Still, the IMF warned again that over the medium term the risk to growth remains skewed to the downside. According to the IMF, the risk to growth “stem from a host of financial tensions, a possible inward‑looking policy shift and persistently low inflation in advanced economies, and a range of noneconomic factors”.
  • The IMF lowered Australia’s GDP growth outlook for 2017 and 2018 to 2.2% (previously 3.1%) and 2.9% (previously 3%). AUD will not be materially impacted by today’s Australian October consumer sentiment index (11:00am Sydney). The consumer sentiment index is expected to remain consistent with soft retail spending.


Overnight Data:

  • The International Monetary Fund (IMF) has lifted its global economic growth forecast for 2017 from 3.5% to 3.6% and lifted the 2018 forecast from 3.6% to 3.7%. The Australian economy is tipped to grow by 2.9% in 2018 after 2.2% in 2017.


Global Equity Markets:                                                                                                                   

  • European sharemarkets were mixed again on Tuesday. Investors continued to closely watch developments in Spain and the continued intentions by Catalonia to unilaterally declare independence. The Spanish IBEX index fell by 0.9%. The STOXX 600 was flat, the German Dax eased 0.2% from record highs while the UK FTSE rose by 0.4%.
  • US sharemarkets rose on Tuesday, with key indexes hitting record intra‑day highs. Shares in Wal‑Mart rose 4.5% after forecasting US online sales would rise by 40% next fiscal year while also announcing a $20 billion buyback plan. Investors also positioned ahead of profit results from major banks on Thursday. The Dow Jones rose by 70 points or 0.3%, the S&P 500 rose by 0.2% and the Nasdaq edged 7.5 points higher or 0.1%.



  • Global oil prices rose on Tuesday. Saudi Arabia has cut November export allocations by 560,000 barrels per day. OPEC is also seeking talks with independent US oil producers and hedge funds in further efforts to balance supply and demand for oil on global markets. Brent crude rose by US82 cents or 1.5% to US$56.61 a barrel. US Nymex rose by US$1.34 or 2.7% to US$50.92 a barrel.
  • Base metal prices rose by up to 1.8% on the London Metals Exchange with lead up the most and copper up 1.4%. But tin fell by 0.2% while aluminium fell by 0.5%. The gold futures price rose by US$8.80 to $1293.80. The spot gold price was trading around US$1,288 an ounce in late US trade. Iron ore fell by USD2.50 to US$59.10 a tonne.



  • In Australia, the monthly consumer confidence data is released with building activity data.
  • In the US, minutes of the last Federal Reserve meeting are released. Weekly mortgage finance data is also released with the job openings (JOLTS) series.


Indicative Rates (Bank to Sell):

AUD / USD 0.7730 AUD / CAD 0.9600 USD / JPY 112.42
AUD / JPY 86.51 AUD / THB 24.95 GBP / USD 1.3205
AUD / EUR 0.6529 AUD / HKD 5.9710 NZD / USD 0.7071
AUD / GBP 0.5829 AUD / SGD 1.0470 NZD / EUR 0.5987
AUD / NZD 1.0916 AUD / FJD 1.5872 AUD / CNY 5.0811
AUD / CHF 0.7384 AUD / PGK 2.4497 All Ordinaries 5807.08
AUD / DKK 4.8473 EUR / USD 1.1660 Gold $US/oz 1288.23
AUD / SEK 6.2242 EUR / GBP 0.8944 Oil WTC $/b 50.88



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