Market Updates 17 July 2017

AUDUSD continued to strengthen and traded as high as 1.3% on late Friday, topping above US $0.78 cent for the first time since May 2015. The push was triggered by a weaker than expected economic data and Feds hinted an unlikely third US interest rate hike later this year.

 

Investors will be looking at GDP result due out today from China & Unemployment numbers from US and from a local focus Unemployment numbers due out in Australia on Thursday.

 

DATA RELEASES THIS WEEK:

 

Monday:

CNY – GDP q/y & Industrial Production y/y

 

Tuesday:

AUD – Monetary Policy Meeting Minutes

NZD – CPI q/q

 

Wednesday:

GBP – BOE Gov Carney Speaks

USD – Building Permits

 

Thursday:

AUD – Employment Change & Unemployment Rate

JPY – Monetary Policy Statement, BOJ Outlook Report & BOJ Policy Report

GBP – Retail Sales m/m

EUR – ECB Press Confidence & Minimum Bid Rate

USD – Unemployment Claims

 

Friday:

CAD – CPI m/m & Core Retail Sales m/m

 

For further information please contact;

 

Andrew Law

General Manager

0411 625 998

Market Updates – 10/07/2017

The markets look to start with a positive view with strong gains on Friday after employment data in the US showed strong jobs growth on the back of non-farm payroll added 222k new jobs. Investors are looking for further directions in the local markets with Business Confidence and Consumer Confidence due out this week and globally at Chairwoman Yellen on Thursday evening local time.

 

AUDUSD is also trading a higher from last week’s low currently seating just above USD $0.75 cents, Gold is slightly down trading just above USD $1,213.15 per ounce while Iron Ore continues to strengthen trading above USD $62.80 a ton.

 

DATA RELEASE FOR THIS WEEK:

 

MONDAY:

CNY – CPY y/y

 

TUESDAY:

AUD – NAB Business Confidence

 

WEDNESDAY:

AUD – Westpac Consumer Confidence

GBP – Average Earnings Index 3m/y

 

THURSDAY:

CAD – BOC Monetary Policy Report, BOC Rate Statement & Overnight Rate

USD – Fed Chair Yellen Testifies, Crude Oil Inventories, PPI m/m, Unemployment Claims

 

FRIDAY:

USD – CPI m/m, Core CPI & Retail Sales

 

Andrew Law

General Manager

0411 625 998

Market Updates 3/7/2017

AUDUSD is trading higher taking advantage of the weaker USD, as investors looking at other central banks potentially increasing rates from Eurozone, UK, Canada and NZ. Speculators are also looking to profit from the surging Euro, Pound & CAD all up around 2% against USD. Focus will be on the PMI data due out in China today, follow by PMI in US and further massive night in trading on Friday when the US releases its Non-farm payroll and unemployment rate.

DATA RELEASES THIS WEEK:

Monday:

CNY – Caixin Manufacturing PMI
GBP – Manufacturing PMI & BOE Gov Carney Speaks

Tuesday:

USD – ISM Manufacturing PMI

AUD – Retail Sales m/m & RBA Rate Statement

GBP – Construction PMI

Wednesday:

EUR – Services PMI

Thursday:

USD – FOMC Meeting Minutes, ADP Non-Farm Employment Change, Unemployment Claims

AUD – Trade Balance

CAD – Trade Balance

Friday:

USD – ISM Non-Manufacturing PMI & Crude Oil Inventories, Non-Farm Employment Change, Unemployment Rate & Average Hourly Earnings m/m

GBP – Manufacturing Production m/m & BOE Gov Carney Speaks

 

Andrew Law

General Manager

0411 625 998

Market Updates 26/06/2017

Australia Stock Markets are shaping for a positive start following solid gains in US as crude oil steadies after a three-day slide last week.   AUDUSD also started strongly currently trading around US$0.7569.
DATA RELEASE THIS WEEK:
Monday:
USD – Core Durable Goods Orders m/m
Tuesday:
EUR – ECB President Draghi Speaks
GBP – BOE Financial Stability Report & BOE Gov Carney Speaks
Wednesday:
USD – CB Consumer Confidence & Fed Chair Yellen Speaks
CAD – BOC Gov Poloz Speaks
EUR – ECB President Drangi Speaks
JPY – BOJ Gov Kuroda Speaks
Thursday:
USD – Crude Oil Inventories, Unemployment Claims & Final GDP q/q
Friday:
CAD – GDP m/m
Andrew Law
General Manager
m: 0411 625 998

Market Updates 19/06/2017

AUD hit a 2 month high last week and it continuing to trade higher against USD on the back of positive local jobs data and a weaker than expected US inflation data and an interest rise in the US. Currently trading above US$0.76 cents with investors watching the unemployment figures due out on Thursday in US.
DATA RELEASES FOR THIS WEEK:
Monday:
AUD – RBA Gov Lowe Speaks
Tuesday:
AUD – Monetary Policy Meeting Minutes
CHF – SNB Chairman Jordan Speaks
GBP – BOE Gov Carney Speaks
Thursday:
USD – Crude Oil Inventories
NZD – RBNZ Rate Statement & Official Cash Rate
CAD – Core Retail Sales m/m
USD – Unemployment Claims
Friday:
CAD – CPI m/m
 
Andrew Law
General Manager
m: 0411 625 998

Market Updates 5/6/2017

USD dropped to its lowest since the US presidential election in November 2016 after the US employment report missed both analyst forecast in May.
USD fell against nine of its G-10 peers with AUD advanced 0.9% to US74.43 cents before coming back down to now trading around US74.26 cents.  AUD also rebounded more than 3%  against the spot price of iron ore. All focus will be on Thursday with the election in England and on the local front, investors will be looking at the Trade balance in both Australia & China.
DATA RELEASES FOR THIS WEEK:
Monday:
GBP – Services PMI
Tuesday:
USD – ISM Non-Manufacturing PMI
AUD – Cash Rate & RBA Rate Statement
Wednesday:
AUD – GDP q/q
Thursday:
AUD – Trade Balance
CNY – Trade Balance
GBP – Parliamentary Elections
EUR – Minimum Bid Rate & ECB Press Conference
USD – Unemployment Claims
Friday:
CAD – BOC Gov Poloz Speaks, Employment Change & Unemployment Rate
GBP – Manufacturing Production m/m
Andrew Law
General Manager
m: 0411 625 998

Market Updates 22/05/2017

Bitcoin reached $1,900 thanks to a rush of investment from Asia, but that did not stay a record for long. BTCUSD is now trading a historic level of above $2,070 per bitcoin giving its entire market cap of about $34 billion.
Local shares are expected to open higher to start this week rebounding from Friday’s losses triggered by renewed interest in oil, gold, iron ore and base mentals. Spot price of iron ore traded 1.8% to US$62.69 a tonne on Friday and Chinese steel futures rallied. Crude Oil also traded higher above US$50, its highest in a month.
Last week our jobless rate fell to 5.7% close to a 4 year low from 5.9% with employers added 106,000 jobs over the first 4 months of 2017. That pushed up AUDUSD from 72.26 cents to as high as 74.67 cents before retreating to current trading level of 74.43 cents.
DATA RELEASE THIS WEEK:
MONDAY:
EUR – Euro Group Meetings
TUESDAY:
GBP – Prime Minister May Speaks, Inflation Report Hearings
EUR – German Ifo Business Climate
THURSDAY:
CAD – BOC Rate Statement & Overnight Rate
USD – Crude Oil Inventories, FOMC Meeting Minutes, Unemployment Claims
NZD – Annual Budget Release
FRIDAY:
USD – Core Durable Good Orders m/m & Prelim GDP q/q
Andrew Law
General Manager
m: 0411 625 998

Market Updates – China uses currency to check rising market meltdown risks

China has an insurance policy against a full-scale market meltdown: the daily currency fixing.

With stocks and bonds in retreat amid anxiety over Beijing’s deleveraging campaign, officials have been guiding the yuan higher against the US dollar in a move that’s caught market watchers by surprise. After meeting expectations earlier in the year, the reference rate used by the People’s Bank of China to manage the yuan has come in stronger than the forecasts of four banks who regularly track the measure on 24 of the past 31 trading days.

The PBOC is using the stronger fixings to prevent panic sentiment from spreading to the currency market,” said Xia Le, chief economist at Banco Bilbao Vizcaya Argentaria in in Hong Kong, referring to the reference rate that’s updated each day. “In the short term, no one can fight against the PBOC when it intervenes through the fixings. Investors will likely become more willing to sell the dollar, pushing the yuan higher from current levels.”

China seems to be trying to find a balance between tackling financial risks while avoiding a wider selloff that undermines faith in the markets and Beijing’s regulatory powers.

Policy makers are railing against speculation and stepping up controls on the banking industry, but also boosting injections of cheap cash amid concern over tight liquidity. The yuan is playing a steadying role, too, with foreign investors citing the currency’s stability in the face of spiking bond yields and equity-market whiplash as one of the reasons they’re sanguine about the clampdown.

While China has largely stemmed outflows through tougher capital controls, the PBOC is engineering a stronger yuan to preempt a renewal of those pressures amid the stock- and bond-market gyrations say, Khoon Goh, head of Asia research forAustralia & New Zealand Banking Group in Singapore. The onshore yuan reached a three-week high on Wednesday.

The authorities likely want to ensure that there is no pickup in outflows and keeping the yuan stable is one way to ensure this,” said Goh, one of the analysts whose forecasts have been trailing the yuan’s reference rates this month.

Predictability fades

Central bank policy stipulates that the yuan is restricted to moves of no more than 2 percent either side of the reference rate. But officials have never divulged exactly how the daily rate is calculated, with banks having to come up with their own models based on what the fixing has done in the past and bits of intelligence from policy makers. Since mid-2016, the reference rate has been very predictable — until now.

The rate has come in stronger than the median of fixing forecasts provided by the four banks — ANZ, Mizuho Bank, Scotiabank and China Guangfa Bank — every trading day since April 5, according to Bloomberg calculations. The fixing was 0.2 percent higher than the median projection on Tuesday, the biggest deviation since February.

The stronger fixing policy will help lure foreign investors to China’s onshore bond market, said Ken Cheung, a Hong Kong-based currency strategist at Mizuho. Offshore funds are set to get increased access to the mainland debt market via a trading link with Hong Kong.

The fact the yuan is seeing stability against the US dollar but remains weak versus other currencies, suggests the stronger fixing run is a sentiment-boosting move. The PBOC didn’t respond to questions faxed to their press office on Thursday.

Downside risks

Traders have been paring bets on yuan weakness, with odds of a drop beyond 7 per dollar by the end of June at 8 percent, down from 38 percent two months ago, according to options data compiled by Bloomberg. But strategists still see the currency, which traded at 6.8929 per dollar on Thursday, retreating to 7.05 per dollar by year-end.

While ANZ’s Goh says the “stronger bias” will likely persist, it will become difficult for the PBOC to maintain as the market starts to price in further interest-rate hikes from the Federal Reserve.

“This is not a fundamental revamp of China’s foreign-exchange policy — the PBOC will want to keep its policy consistent, which is the cornerstone of yuan stability,” said Mizuho’s Cheung. “But as China eases capital curbs to push for internationalization in the second half, the currency will face mild pressures to weaken.”

Andrew Law
General Manager
m: 0411 625 998

MARKET UPDATES 15/05/2017

AUD is trading higher against its USD despite a surge against other major currencies. USD has climbed to a 8 week high against the CNY last week. AUD has soared against NZD and the GBP also hit a 3 week high against EUR & USD. Investors will be looking at the Unemployment rate in Australia & US on Thursday for further directions.
DATA RELEASES THIS WEEK:
MONDAY:
CNY – Industrial Production y/y
TUESDAY:
GBP – Prime Minister May speaks
AUD – Monetary Policy Meeting Minutes
GBP – CPI y/y
USD – Building Permits
WEDNESDAY:
NZD – GDT Price Index & PPI Input q/q
GBP – Average Earnings Index 3m/y
CAD – Manufacturing Sales m/m
USD – Crude Oil Inventories
THURSDAY:
AUD – Employment Change & Unemployment Rate
GBP – Retail Sales m/m
USD – Unemployment Claims
FRIDAY:
EUR – ECB President Draghi Speaks
CAD – CPI m/m & Core Retail Sales m/m
Andrew Law
General Manager
m: 0411 625 998

Australia Budget Update – Losers

Foreign investors

Foreign investors in Australian residential property are facing tougher rules, including the removal of the main residence capital gains tax exemption, tightened compliance and a cap 50 per cent sales to foreigners in new developments. There will also be a “ghost tax” of at least $5000 per year on all foreign investors who fail to either occupy or lease their property for at least six months of the year.

Banks

Big banks will be hit with a levy on liabilities of $100 million or more from July 1, to reap $6.2 billion for the government over the next four years.

Mr Morrison said it was “similar to measures imposed in other advanced countries, and will even up the playing field for smaller banks”.

But any customer deposits of less than $250,000 would be exempt from the levy.

A simpler system for Australians to resolve disputes with banks will also be established.

Mr Morrison also said Australians needed to get a fairer system from banks.

“Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements,” he said.

Smaller banks would face fines of $50 million and $200 million for larger banks if they breach misconduct rules.

Everyone

Sure, Medicare is getting a boost — but you’ll be paying for it. The Budget will hit most workers hard, with a $8 billion tax grab.

The Government will increase the Medicare levy from 2 per cent to 2.5 per cent of taxable income from July 1, 2019 to fund the National Disability Insurance Scheme.

You’ll only be exempt if your income is below the threshold of $21,655 for singles, $36,541 for families and $34,244 for pensioners.

Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.

The measure is predicted to make $8.2 billion revenue for the Government over four years.

University students

University funding will be cut by $2.8 billion over four years. Students will face a 7.5 per cent tuition fee hike, phased in over four years starting in 2018.

The maximum increase for a four-year, government-subsidised degree will be $3600, with a maximum total cost of $50,000. A subsidised six-year medical degree will cost a maximum of $75,000.

Graduates will start repaying their loans at a lower income threshold of $42,000 instead of $51,957, high income earners (over $119,882) will pay 10 per cent of their income instead of eight per cent.

Income thresholds for repayment will be indexed to the consumer price index instead of the faster rising average weekly wages, meaning higher repayments to the government over the longer term.

Universities will have to meet a 2.5 per cent efficiency dividend, and their funding will depend on performance.

Foreign workers

As well as previously announced changes to the 457 visa system, the government will also introduce a levy on businesses that employ foreign workers.

From March next year, the levy on foreign workers on certain skilled visas will go towards a new Skilled Australians Fund.

Small business will have to pay $1200 per year for a foreign worker, along with a one-off $3000 payment. Larger businesses would pay $1800 a year per worker, along with a one-off payment of $5000.

This is expected to bring in $1.2 billion over the next four years to go towards training Australian workers.

Ex-pollies

Former Parliamentarians will lose their cushy travel entitlements, with the life gold pass being abolished for everyone except former Prime Ministers.

The measure will save $2.6 million over five years by stripping former MPs of the taxpayer-funded business class travel they previously enjoyed at taxpayer expense.

Former Prime Ministers will retain access to the entitlement, in order to meet the commitments that arise from their continued standing and involvement in the community.

Banana smoothie-loving hipsters

Your fashionable banana smoothies and tea tree oil skincare could cost even more as the Government increases agricultural levies and export charges on the request of the sector.

From July, there will be a levy of 25 cents per kilogram of tea tree oil sold domestically or exported, and the levy on bananas will increase by just under 0.5 cents per kilogram.

Of course, there is a slim chance sellers will take pity on the needy and not increase the retail price.

Anti-vaxxers

Parents who don’t vaccinate their children will be $14-a-week worse off, with $28 set to be wiped from their family tax benefits every fortnight.

The measure, which will start from July 2018, is expected to raise $15 million over four years, while sending a tough message to those who fail or refuse to immunise their children.

Social Services Minister Christian Porter and Health Minister Greg Hunt said last week that reducing fortnightly payments instead of withholding the end-of-year supplement would serve as a constant reminder to parents to vaccinate their children.

Welfare recipients

If you’re on Centrelink, expect to be hit by a tough new regime aimed at saving $632 million over the five years from 2016-17.

A crackdown on unemployed Australians with drug and alcohol habits will include penalties for those who fail to turn up to appointments or work-for-the-dole placements due to intoxication, with payments to be reduced or cancelled.

Anyone who does not show up without a reasonable excuse will have their payment suspended until they “re-engage” with their job services provider, and demerit points will be accrued for each incident.

The measures include a drug testing trial of 5000 new welfare recipients, and new rules making drug addicts and alcoholics ineligible for disability pensions for medical conditions “caused solely by their own substance abuse”.

Those who test positive to illicit drugs will have their welfare payments placed onto a cashless debit card, which can only be used to pay for legitimate living expenses.

The government will further penalise claimants who miss appointments and fail to update their information by removing backdating provisions.

And a crackdown on single parents will target those who fraudulently collect multiple payments, with single-parent households to be subjected to closer scrutiny to verify their relationship status.

Fraudsters

The Australian Taxation Office will be given $28.2 million to crack down on serious and organised crime in the tax system, extending an existing measure to 2021.

It’s hoped this will help claw back $408.5 million in revenue, meaning a net gain of $380.3 million over four years.

The arts

Spending on arts and cultural heritage will decrease by 2.6 per cent in real terms from 2016-17 to 2017-18, and by 12.0 per cent in real terms over the period 2017-18 to 2020-21.

This includes programs that support funding for the arts and cultural institutions, reflecting the implementation of efficiencies and arts-related savings measures from 2014-15 and 2015-16.

Developing countriesAustralia’s ever-shrinking foreign aid contribution will be cut by 16.9 per cent in real terms between 2016-17 and 2017-18 to $3.35 billion, and is forecast to decline by 3.4 per cent in real terms over the next four years to $3.6 billion in 2020-21.

Sweeping cuts to the foreign aid budget, which peaked at $5.6 billion in 2012-13, were initiated by the Abbott government in 2014, plunging Australia down the world generosity rankings and bringing total aid as a proportion of gross national income fall to its lowest level in the nation’s history.

Smokers

The war on durries continues. Roll-your-own tobacco and cigars will soon be more expensive under a plan to bring their tax treatment in line with pre-made cigarettes. The change will be phased in over four years from 2017 to 2020, to coincide with the existing annual 12.5 per cent tobacco tax increases which occur on 1 September each year. The move is expected to claw an extra $360 million in tax revenue from Australia’s brown, stained fingers over the next four year.​

Andrew Law
General Manager
m: 0411 625 998