Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • The US tax legislative process is progressing at an encouraging pace which will support the USD this week. The Senate Finance Committee begins on Monday to mark‑up their version of the “Tax Cuts and Jobs Act” unveiled last week. A mark‑up session is where the Senate Finance Committee goes through the bill line by line and amends the package before advancing it to the full Senate for a vote (likely to be by end November). Meanwhile, the full House is expected to vote on their marked‑up version of the “Tax Cuts and Jobs Creation Act” Tuesday.
  • In our view, the differences between the House and Senate tax plans are not significant enough to derail the approval of a joint (House and Senate) final tax package. Nevertheless, USD upside is limited because it is still unclear if a pro‑growth tax package will have enough Republican support to pass through Congress (House and Senate) by year-end or Q1 2018. Data wise, the US October CPI and retails sales reports are the highlights (Thu). Speeches by a handful of FOMC policymakers this week may also generate some intra‑day USD volatility. FOMC voter Harker speaks today on balance sheet normalisation (11:10am Sydney).
  • AUD/USD will continue to range trade this week. In Australia, the October labour market data (Thu) and the Q3 wage price index (Wed) will be supportive for AUD in our view. But disappointing Chinese October economic data on Tuesday can temporarily weigh on commodity prices and curtail AUD/USD upside. We see some downside risks to Chinese October fixed asset investment and industrial production growth as a result of fresh environmental protection drive and intensifying housing curbs. RBA Deputy Governor Guy Debelle speaks today on “Business Investment in Australia” (9am Sydney).


Overnight Data:

  • In US economic data, consumer sentiment fell from 100.7 to 97.8 in November (forecast 100.7). Wholesale sales rose 1.3% in September (forecast +0.9%) with inventories up 0.3% as expected.


Global Equity Markets:                                                                                                                  

  • European shares ended the worst week since August with the pan‑European STOXX 600 index down 0.4% on Friday. Softer earnings growth and uncertainty on US tax reform prompted profit‑taking. The German Dax fell by 0.4% and the UK FTSE lost 0.7%.
  • US sharemarkets were mixed on Friday as investors mulled tax reform proposals. At the close of trade, the Dow Jones was down by 40 points or 0.2%. The S&P 500 was down by 0.1% but the Nasdaq rose by 1 point or less than 0.1%. Over the week the Dow lost 0.5% and the S&P 500 and Nasdaq both lost 0.2%.



  • Global oil prices fell on Friday. According to energy services company Baker Hughes, oil drillers added nine oil rigs this week, the most in a week since June. But investors also expect that OPEC oil ministers will agree at the next meeting on November 30 to extend production cuts past the current expiry date in March 2018. Brent crude fell by US31 cents or 0.5% to US$63.62 a barrel. US Nymex fell by US43 cents or 0.8% to US$56.74 a barrel. Over the week Brent rose by 2.5% with Nymex up 2%.
  • Base metal prices rose by up to 1.2% on the London Metals Exchange on Friday with zinc up the most. But nickel lost 1.6% and copper lost 0.4%. Over the week metals fell by between 0.8‑4.9% with nickel the weakest. But lead rose 2.3% and zinc rose 0.5%.
  • The gold futures price fell by US$13.30 or 1.0% to $1,274.20 an ounce. Over the week gold rose US$5.00 or 0.4%. The spot gold price was trading around US$1,276.06 an ounce in late US trade. Iron ore rose by US10 cents or 0.2% to US$62.00 a tonne. Over the week iron ore rose by US $2.60 or 4.4%.



  • In Australia, RBA Deputy Governor Guy Debelle delivers a speech a 9am AEDT and lending finance figures are released.


Indicative Rates (Bank to Sell):

AUD / USD 0.7604 AUD / CAD 0.9577 USD / JPY 113.54
AUD / JPY 86.01 AUD / THB 24.41 GBP / USD 1.3176
AUD / EUR 0.6510 AUD / HKD 5.8747 NZD / USD 0.6936
AUD / GBP 0.5750 AUD / SGD 1.0343 NZD / EUR 0.5949
AUD / NZD 1.0955 AUD / FJD 1.5771 AUD / CNY 5.0509
AUD / CHF 0.7428 AUD / PGK 2.4182 All Ordinaries 6104.27
AUD / DKK 4.8331 EUR / USD 1.1510 Gold $US/oz 1276.21
AUD / SEK 6.3489 EUR / GBP 0.8849 Oil WTC $/b 56.70



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