Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD rallied against all major currencies overnight and US 10-year Treasury yields rose to near a three-week high of 2.197% on the rising prospect US pro-growth tax reforms may be possible by year-end. One of the big tax reform sticking point between senior tax policymakers from Congress and the Trump administration is whether tax reforms should be revenue-neutral or add to the federal deficit. Republican leaders from Congress have consistently called for tax reforms to be revenue-neutral.

But overnight US House speaker Paul Ryan (a senior tax policymakers from Congress) appeared to be less committed to having tax reform be revenue-neutral noting that boosting the economy and fixing the tax system “is more important than anything else”.

Once the proposed tax legislation is released (expected during the last week of September at the earliest), we will have a better idea of whether tax reform will be possible by year-end. An improving US fiscal agenda (more precisely cuts to the US company tax rate) is an upside risk to our lower USD view.

  • AUD/USD fell overnight on broad-based USD strength. It’s a big day for AUD today with the release of Australia’s August labour force report (11:30am Sydney) and China’s August economic activity data (industrial production, retail sales and fixed asset investment) (12:00pm Sydney). Remarks by RBA Deputy Governor Guy Debelle (9:15am Sydney) may also generate some AUD volatility.

Overall, we expect Australia’s economy to add 20k jobs in August (in line with consensus) making it the sixth consecutive month of solid job gains. The unemployment rate is projected to be unchanged at 5.6%. Favourable Australian employment conditions and/or encouraging Chinese economic activity will continue to underpin a firmer AUD.


Overnight Data:

  • On the US economic data front, US headline PPI inflation accelerated in August at an annual pace of 2.4% (consensus: 2.5%) from 1.9% the previous month because of higher gasoline prices. Tonight’s US August CPI report (10:30pm Sydney) will be a better gauge of US inflation pressures.


Global Equity Markets:                                                                                                                 

  • European share markets were mixed on Wednesday. The Euro STOXX 600 index was broadly unchanged and while the German Dax was up by 0.2%, the UK FTSE eased by 0.3%. In London trade, shares in Rio Tinto fell by 1.8% while BHP fell by 2.1%.
  • US share markets ended at record highs on Wednesday. The Dow Jones index rose by 39 points or 0.2% to record highs with the S&P 500 up 0.1% to record highs while the Nasdaq rose by 6 points or 0.1% also to the highest close recorded.



  • Global oil prices rose on Wednesday. The International Energy Agency said in its monthly report that higher global demand for oil and reduced output by major OPEC and non‑OPEC producers were starting to reduce the global oil surplus. Traders were tending to look through the weekly data showing a bigger‑than‑expected lift in US oil inventories. Brent crude rose by US89c or 1.6% to US$55.16 a barrel. US Nymex rose by US$1.07 or 2.2% to US$49.30 a barrel.
  • Base metal prices fell by between 0.9‑5.3% on the London Metal Exchange on Wednesday. Lead fell the least with nickel down the most.
  • The December Comex gold futures price fell by US$4.70 or 0.4% to US$1,328.00 per ounce. The spot gold price was trading around US$1,322 an ounce in late US trade. Iron ore was unchanged at US$74.20 a tonne.



  • In Australia, the August jobs report is released.
  • In China, retail sales, production and investment data is released.
  • In the US, the consumer price index and weekly jobless claims data is due.


Indicative Rates (Bank to Sell):

AUD / USD 0.7936 AUD / CAD 0.9577 USD / JPY 110.47
AUD / JPY 87.27 AUD / THB 25.56 GBP / USD 1.3209
AUD / EUR 0.6658 AUD / HKD 6.1386 NZD / USD 0.7245
AUD / GBP 0.5983 AUD / SGD 1.0707 NZD / EUR 0.6093
AUD / NZD 1.0936 AUD / FJD 1.6062 AUD / CNY 5.1915
AUD / CHF 0.7499 AUD / PGK 2.5175 All Ordinaries 5804.00
AUD / DKK 4.9423 EUR / USD 1.1740 Gold $US/oz 1323.65
AUD / SEK 6.3567 EUR / GBP 0.9001 Oil WTC $/b 49.25




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