Overnight Market & Currency Developments – From Our Bankers

Overnight Developments:

  • USD recovered overnight largely because of JPY and EUR weakness. USD/JPY rallied by over 1% on positive global equity market performance and higher US 10-year treasury yields (up 8bps to 2.13%). Meanwhile, EUR/USD fell by roughly 0.60%. Cautious comments from European Central Bank (ECB) board member Benoit Cœure appears to have undermined EUR later during the European session. While Coeure noted that “euro strength may have less of an impact on growth than, for example, after the Great Financial Crisis”, he warned that a persistent exchange rate shock could drag down inflation.

For now, encouraging Eurozone economic activity suggests the EUR’s appreciation is not a major headwind to the Eurozone economy. In fact, July Italian industrial production printed well above expectations at 4.4% y/y. The implication is the ECB is on track to taper its asset purchases in January 2018 which will continue to favour a stronger EUR/USD.

  • AUD/USD edged a bit lower on USD strength. AUD outperformed mostly against EUR and JPY supported by higher iron ore future prices and positive global equity market performance. Australia’s NAB August business survey is released today (11:30am Sydney) but the data is unlikely to have a material impact on AUD. In our view, a strong 20,000 increase in Australian August employment (Thu) and/or encouraging Chinese’s August activity data (Thu) will underpin a firmer AUD this week.


Global Equity Markets:                                                                                                                  

  • European sharemarkets were stronger on Monday. Insurers posted solid gains on reports that the cost of Hurricane Irma is unlikely to be as high as initially thought. There was also relief that a mooted missile test in North Korea didn’t occur. The Euro STOXX 600 index rose by 1%, with the German Dax up by 1.4% and the UK FTSE higher by 0.5%. In London trade, shares in Rio Tinto rose by 2.2% while BHP rose by 1.2%.
  • US sharemarkets posted strong gains on Monday. Insurers rose on reports that damage caused by Hurricane Irma is likely to be less than earlier thought. Shares in Apple rose by 1.8% ahead of new product launches on Tuesday. The Dow Jones index rose by almost 260 points or 1.2% after being up 269 points in afternoon trade. The S&P 500 rose by 1.1% to record highs while the Nasdaq rose by 72 points or 1.1%.



  • Global oil prices rose slightly on Monday. Investors were monitoring the impact of recent hurricanes on both supply in the US Gulf and demand in southern US states near Florida. Also investors were watching the early negotiations amongst major oil producers to extend the production cut agreement past March 2018. Reuters reported that Saudi Arabia’s Energy Minister Khalid al‑Falih met his Venezuelan and Kazakh counterparts at the weekend. And Falih met with the United Arab Emirates counterpart on Monday. Brent crude rose by US6c or 0.1% to US$53.84 a barrel. US Nymex rose by US59c or 1.2% to US$48.07 a barrel.
  • Base metal prices rose by up to 1.7% on the London Metal Exchange on Monday with zinc and nickel leading the gains.
  • The December Comex gold futures price fell by US$15.50 or 1.1% to US$1,335.70 per ounce. The spot gold price was trading around US$1,327 an ounce in late US trade. Iron ore fell by US10 cents to US$73.60 a tonne.



  • In Australia, credit & debit card data are released with tourist arrivals & departures and weekly consumer confidence.
  • In the US, the JOLTS job openings series is released with weekly chain store sales and the NFIB business optimism index.


Indicative Rates (Bank to Sell):

AUD / USD 0.7979 AUD / CAD 0.9584 USD / JPY 109.37
AUD / JPY 86.85 AUD / THB 25.68 GBP / USD 1.3168
AUD / EUR 0.6655 AUD / HKD 6.1702 NZD / USD 0.7255
AUD / GBP 0.6034 AUD / SGD 1.0726 NZD / EUR 0.6068
AUD / NZD 1.0978 AUD / FJD 1.6063 AUD / CNY 5.2079
AUD / CHF 0.7476 AUD / PGK 2.5226 All Ordinaries 5775.06
AUD / DKK 4.9407 EUR / USD 1.1807 Gold $US/oz 1327.72
AUD / SEK 6.3748 EUR / GBP 0.9080 Oil WTC $/b 48.01



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