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Global Market Update
The View from Australia

Craig Killaby September 8, 2019



> AU AIG Construction Index : 44.6 v. 39.1 prev.

> EU July German Industrial production : -0.6% v. 0.4% exp.

> CA August Unemployment Rate & Employment Change : 5.7% & 81.1K v. 5.7% & 18.9K exp.

> US August Non-Farm Employment Change & Unemployment Rate : 130K & 3.7% v. 160K & 3.7%

> US August Average Hourly Earnings : 0.4% v. 0.3% exp.


Overnight Headlines (BBG)


>  China’s exports unexpectedly contracted in August, with sales to the U.S. tumbling amid the escalating trade war

>  Weak August job gains signaled the U.S. labor market’s slowdown is deepening as the trade war with China takes a toll on the economy


What you need to know


With the Aussie continuing to push higher, it was weak data from the US on Friday that dented the Dollar and opened the door for fresh highs. It was a relatively quiet trading session on Friday, with markets looking ahead to the US employment report and the US Fed Chair Powell’s speech in the evening. The headline jobs number from the US surprisingly dropped in August, however wages were able to edge slightly higher coming in at 0.4%. Market reaction was an initial selloff in the Buck, however the Dollar opens little changed from Friday morning following the lack of real answers in Powell’s speech. Powell reiterated that the Fed will act as appropriate, with reaction in bond markets muted. The AUD and NZD were some of the weekend’s best performers, with the Aussie touching 0.6862 amid the rebound in global risk appetite. AUD crosses are also higher across the board, with AUDGBP the best performer after the GBP was unable to hold on to the Brexit optimism it benefited from for most of last week. Mixed bag on commodities, with Iron Ore down while Oil was able to push 1.35% up on the day. Equity markets up a touch, with the announcement of the planned US/China trade talks sparking optimism.


The Day Ahead




> AU July Home Loans : 0.5% exp.

> UK July GDP : 0.1% exp.

> UK July Manufacturing Production : -0.3% exp.


Expecting a quiet start to the week, and it may be much of the same locally with a very quiet week ahead on the AU docket. The weekly data highlights will come at the back half with the ECB’s rate decision and US inflation on Thursday the major risks. As per usual, it will be any sort of headlines on trade that will dictate the risk appetite with the results being anyone’s guess.


Range for the day : 0.6810 – 0.6875


AUD/USD Technicals


The momentum is clearly on the bullish side over the last week, with the pair now looking to make a sustained run above 0.6900. After breaking through 0.6830s the next level will be the August 1 high of 0.6868 with the July highs of 0.6920/55 next up. Resistance becomes support after the rally, with 0.6830 holding up the pair with the real support coming at 0.6677 and the decade low.


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