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Global Market Update
The View from Australia

Craig Killaby September 16, 2019



> CN August Fixed Asset Investment & Industrial Production : 5.5% & 4.4% v. 5.7% & 5.2% exp.

> CN August Retail Sales & Unemployment Rate : 7.5% & 5.2% v. 7.9% exp. & 5.3% prev.

> US August Empire State Manufacturing Index : 2.0 v. 4.1 exp.


Overnight Headlines (BBG)


>  Saudi Arabia says Iranian weapons were used to attack oil facilities

>  Trump announces that there has been a US trade agreement reacted with Japan


What you need to know


It was a relatively lacklustre start to the trading week for the AUD, trading in a 30 pip range despite the data dump from China. The highlight for the session came from China’s monthly release of key data, all except unemployment missed expectations as the economy continues to soften amidst the trade war. AUD reaction muted, with the low coming around midnight with the pair touching 0.6854. The major story continues to be the developments in oil as the Saudis revealed that there were Iranian weapons used in the attack on their most important oil facility. WTI crude continued to push higher as supply concerns dominated, up another 3% and rising 12% from Friday’s open. Oil related currencies the best performers on the session, with NOK and CAD getting boosts on the surge in the price of black gold. The Dollar firmed 0.5% in DXY terms, with risk aversion the theme with markets jittery on a possible US retaliation on Iran following the weekend attack. US equity markets started the week in the red with the S&P500 down 0.5%. Gold up 0.75%.


The Day Ahead




> AU September RBA Meeting Minutes

> AU Q2 HPI : -1.0% exp.

> EU September German ZEW Economic Sentiment : -38.0 exp.

> CA July Manufacturing Sales : -0.3% exp.

> US August Industrial Production : 0.2% exp.


Local house price index figures and the RBA’s minutes from their September meeting will hit the wires this morning. The chance that the minutes show anything that markets didn’t know are thin, while investors are likely to shy away from large positions ahead of the very important FOMC on Thursday morning. Currently the market has 99.9% chance of a 0.25% cut at the meeting. Early this morning Trump announced that a trade agreement has been made with Japan, although positive signs that is not the agreement the market is eagerly awaiting. Negotiations may be set to begin between the US/China as early as next week.


Range for the day : 0.6840 – 0.6900


AUD/USD Technicals


The pair has found solid support around the 55DMA at 0.6865, with the likelihood of a range break today minimal. With the 100DMA sitting at the psychological 0.6900 handle, there will need to be a break there to see further upside. No change to support below the 55DMA, with 0.6801 and 0.6764 the levels to keep an eye on.


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