Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • AUD/USD has consolidated despite yesterday’s very strong August labour market report.  The failure of AUD to keep moving higher, particularly when the USD was lower overnight, suggests markets participants are long AUD.

Employment surged by 54,200 (consensus: 20,000), including a 40,100 increase in full-time employment.  Australian employment growth has been solid-to-strong for six consecutive months – an unusual development.  The unemployment rate was steady at 5.6% because the participation rate lifted by 0.2pp to 65.3% (the highest since 2012).  Under-employment rate also fell from 8.8% to 8.6%. The job vacancies suggest further solid gains in employment is likely in coming months.  Together with a predicted pick-up in non-mining CAPEX, the Australian economy is on a solid footing.  But the RBA needs to see some pick up in wage growth before they contemplate rate hikes.

  • USD eased a little overnight.  US August headline and core CPI were slightly stronger than expected at 1.9%pa and 1.7%pa respectively.  The recent hurricanes may push inflation up further next month before unwinding in coming months.  The odds of a rate hike by the FOMC in December has increased to 43%.  Today’s US August retail sales and industrial production are today’s highlight (10:30pm and 11.15pm Sydney).  Retail sales and industrial production may soften below consensus estimates initially because of disruption before recovering strongly in coming months.  Softer US economic data may guide the USD lower tonight.


Overnight Data:

  • The Bank of England left rates unchanged overnight, as expected. However, it left the door open to a potential rate increase “over coming months” saying that its tolerance for above‑target inflation had fallen, in spite of the ongoing Brexit‑related uncertainty. We do not expect the BoE to lift interest rates in the short‑term due to the slowing housing market and slow Brexit negotiations.
  • US August headline and core CPI were slightly stronger than expected at 1.9%pa and 1.7%pa respectively.  The recent hurricanes may push inflation up further next month before unwinding in coming months.  The odds of a FOMC rate hike by December has increased to 43%.


Global Equity Markets:                                                                                                                  

  • European share markets were mixed again on Thursday. Leading the gains were energy stocks and retailers while mining stocks fell. The Euro STOXX 600 index rose by 0.1% while the German Dax was down by 0.1% and the UK FTSE lost 1.1%. In London trade, shares in Rio Tinto fell by 3.4% while BHP fell by 3.3%.
  • US share markets were mixed on Thursday. A slightly firmer inflation reading provided support for financials.  The Dow Jones rose by 45 points or 0.2% to record highs but the S&P 500 fell 0.1% from record highs while the Nasdaq lost 31 points or 0.5% from record highs.



  • Global oil prices rose on Thursday as investors continued to react to the latest forecasts from the International Energy Agency. The IEA 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. The IEA lifted its forecast for world oil demand in 2017 from 1.5 billion barrels per day to 1.6bpd. Brent crude rose by US31c or 0.6% to US$55.47 a barrel. US Nymex rose by US59 cents or 1.2% to US$49.89 a barrel.
  • Base metal prices fell by between 0.4‑1.3% on the London Metal Exchange on Thursday. Nickel was down the most. But lead rose 0.9% and tin edged up 0.1%.
  • The December Comex gold futures price rose by US$1.30 or 0.1% to US$1,329.30 per ounce. The spot gold price was trading around US$1,328 an ounce in late US trade. Iron ore fell by US80 cents or 1.1% to US$73.40 a tonne.



  • In Australia, no major data.
  • In the US, retail sales and industrial production data are due.


Indicative Rates (Bank to Sell):

AUD / USD 0.7951 AUD / CAD 0.9603 USD / JPY 110.15
AUD / JPY 87.20 AUD / THB 25.57 GBP / USD 1.3401
AUD / EUR 0.6656 AUD / HKD 6.1526 NZD / USD 0.7228
AUD / GBP 0.5909 AUD / SGD 1.0699 NZD / EUR 0.6065
AUD / NZD 1.0985 AUD / FJD 1.5879 AUD / CNY 5.2109
AUD / CHF 0.7506 AUD / PGK 2.5144 All Ordinaries 5798.41
AUD / DKK 4.9411 EUR / USD 1.1768 Gold $US/oz 1330.23
AUD / SEK 6.3379 EUR / GBP 0.8893 Oil WTC $/b 49.81



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