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Global Market Update
The View from Australia

Craig Killaby August 13, 2019

Data/Speakers

 

> AU NAB Business Confidence : 4 v. 2 prev.

> UK July Average Earnings Index : 3.7% v. 3.7% prev.

> UK July Claimant Count Change & Unemployment Rate : 28.0K & 3.9% v. 42.0K & 3.8% exp.

> US July CPI & Core CPI : 0.3% & 0.3% v. 0.3% & 0.2% exp.

 

Overnight Headlines (BBG)

 

>  The Trump administration will delay until mid-December the 10% tariff on some Chinese products on many holiday-shopping lists

 

What you need to know

 

It was a session that saw risk assets perform well, as Trump decided to bring some early Christmas cheer and delay the new tariffs on Chinese goods until mid-December to alleviate any sort of impact on the US holiday shopping. The result in financial markets was a significant risk-on move with the havens such as the JPY and CHF having a tough day. The Dollar had a good session, buoyed by a strong US consumer inflation print in the overnight session and seeing probabilities towards more Fed cuts shift. During the APAC session it was relatively quiet, with no real data the market traded sideways throughout the session. With the announcement of Trump’s tariffs delay and the way the AUD held up against the Buck, it showed that the market may have been positioned too short and that risk appetite is proving to be the major factor in the Aussie’s performance of late. As expected from the risk-on shift, US equity markets had a very good day as the S&P500 closed up 1.5%. Good session for commodity markets, with Gold the laggard down 0.8% while Iron Ore, Copper and Oil all up significantly on the session.

 

The Day Ahead

 

Data

 

> AU Q2 Wage Price Index : 0.5% exp.

> CN July Fixed Asset Investment & Industrial Production : 5.9% & 6.0% exp.

> CN July Retail Sales & Unemployment Rate : 8.6% exp. & 5.1% prev.

> EU Q2 German Prelim GDP : -0.1% exp.

> AU RBA Ast. Gov. Debelle to speak

> UK July CPI & Core CPI : 1.9% & 1.8% exp.

> US July Import Prices : 0.0% exp.

> US EIA Crude Oil Inventories : -2.5M exp.

 

Today there will be a fair bit on the data docket with AU wages kicking it all off at 11:30am this morning. Also, a touch prior to the data will be the CNY fix and after Trump’s decision to delay the new tariffs the Chinese response will be eagerly anticipated. The Chinese also release their data dump at mid-day today, with positive reads here likely to light a fire under the AUD. Overnight, any positive trade comments will have a substantial impact on sentiment and a chance for the Aussie to make another run at the 0.6900 handle.

 

Range for the day : 0.6775 – 0.6835

 

AUD/USD Technicals

 

Seems to be some resistance a touch above 0.6800, with 0.6818 the level to watch on any upside moves. If the pair is able to push through, then the June low of 0.6832 is a real possibility. Downside levels have been untested of late, with the decade low of 0.6677 needed to be broken for further downside with the 2009 lows holding up the pair.

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