December 10, 2019

Market Outlook

The Aussie dollar has been weaker at the start of this week due to the combination of bumper US job numbers last Friday and anticipation over the next phase of the US-China trade talks. Wall Street also closed lower on Monday, after three consecutive sessions of gains, as investors now await a Fed policy announcement this Wednesday.

 

Week Ahead

Australia: NAB Business Confidence, RBA Gov Lowe Speaks, and RBA Assist Gov Bullock Speaks; US: Retail Sales, FOMC Statement, Fed Funds Rate, and FOMC Press Conference; Eurozone: German Final CPI, SNB Monetary Policy Assessment, SNB Press Conference, UK Parliamentary Elections, UK GDP, Industrial and Manufacturing Production, EU Monetary Policy Statement, and ECB Press Conference.

 

AUD

The Australian dollar was lower on Monday as markets took in the larger than expected US jobs numbers last Friday. 266k new jobs were created in the month of November with the unemployment rate falling from 3.6% to 3.5% which boosted the Greenback against the Aussie dollar. In European markets AUD has been relatively mixed with AUD/EUR nearing one-month highs. However, paired against the Swiss Franc AUD has fallen to three-week lows.

 

Today’s RBA speech from governor Lowe avoided monetary policy and focused the spotlight on payment policies. The direction of the Australian dollar over the next week now remains at the mercy of the US with inflation data Wednesday and the US Federal Reserve decision on Thursday.

 

NAB business confidence fell to zero in November from the October figure of 2. This was broadly in line with market expectations but is still not AUD positive. Confidence fell in all industries, except for retail and wholesale which rose slightly.

USD 

The US dollar gained on the back of extremely positive job numbers and a slight reduction in the unemployment rate to 3.5%. The printing of 266k new jobs was the best jobs report since February this year. An improvement in US consumer confidence has also helped the US dollar along with  with the Dow Jones index pushing 1.2% higher.

 

The all-important jobs data from the US always considers a figure above 200k bullish and with the US labour market showing strength and average earnings increasing by 3.1% over the past year, this would now point to the Fed being reluctant to cutting interest rates anytime soon.

GBP

The Pound’s recent strength could be a thing of the past over the next few days if the Conservative Party fails to win a majority in the general election. Sterling has increased on speculation of a Tory majority, but for this reason, further upside potential may be limited from here on and the downside risk could increase. A Tory government would encourage sterling buyers initially, but the market would then turn to look at the UK leaving the EU on January 31st and also the prospects of a trade deal being agreed by the end of 2020.

 

Ultimately, it’s going to be up to the electorate as to whether the country continues three and a half years of indecision, and probably prevent Brexit by electing a coalition government, or actually leave the EU by electing a Tory majority government. The Pounds recent gains against the Aussie and US dollar could reverse on the prospect of a Corbyn-led administration before a potential rally on the prospects of another referendum later in 2019.

 

 

EUR

In Europe, the AUDEUR was stronger as the euro fell ahead of this week’s key meeting from the European Central Bank. The Euro’s performance is very much being determined by other currencies at the moment. This is despite German economic data showing the economy has slowed. Industrial production hit a 10-year low last Friday, as it dropped 1.7% in November. The ECB interest rate decision this Thursday is not expected to change and will probably remain the case until Christine Lagarde’s overview of the Eurozone has been completed.

 

Rest of the World

 

Chinese inflation grew to 4.5% in November 2019 from a previous figure of 3.8% in the previous month. This was above the market expectations of 4.2% and is the highest reading since January 2012.

Event Wrap

 

Monday

JPY – Final GDP

EUR – German Trade Balance

 

Tuesday

AUD – NAB Business Confidence

AUD – RBA Gov Lowe Speaks

AUD – RBA Assist Gov Bullock Speaks

CNY – CPI

GBP – GDP

GBP – Manufacturing Production

GBP – Industrial Production

EUR – German ZEW Economic Sentiment

 

Wednesday

AUD – Westpac Consumer Sentiment

CNY – Foreign Direct Investment

CNY – New Loans

USD – CPI

 

Thursday

USD – FOMC Statement

USD – Fed Funds Rate

USD – FOMC Press Conference

AUD – RBA Bulletin

EUR -German Final CPI

CHF – SNB Monetary Policy Assessment

 

 

CHF – SNB Press Conference

GBP – Parliamentary Elections

EUR – Monetary Policy Statement

EUR – ECB Press Conference

 

Friday

CAD – BOC Gov Poloz Speaks

AUD – Business NZ Manufacturing Index

USD – Retail Sales

USD – FOMC Member Williams Speaks

 

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it 

 

by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may 

 

be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

December 3, 2019

Market Outlook
The Aussie dollar was weaker towards the end of last week as the market prepared itself for a bumper week of local Aussie-data-action. The Caixin Manufacturing PMI from China posted stronger numbers than the market had anticipated and the Reserve Bank of Australia (RBA) held its cash rate at the record low of 0.75%. Meanwhile, in the US President Trump signed the bill supporting Hong Kong into law last week, which could see China lose favourable trading status. The US economy had signalled expansion towards the end of last week but recent data has proved otherwise. This time of year there usually sees a demand for US dollars which could see the Greenback gather ground against a number of currencies this December.

Week Ahead
It’s a bumper week of data from Australia and the US. Australia: Company Operating Profits, Current Account, RBA Rate Statement, Trade Balance, Retail Sales, and GDP; US: ISM Manufacturing PMI, ADP Non-Farm Employment Change, FOMC Member Quarles Speaks, Trade Balance, Average Hourly Earnings, Non-Farm Employment, and the Unemployment Rate; Eurozone: UK Manufacturing, Construction and Services PMI, ECB President Lagarde Speaks, German Manufacturing PMI and Industrial Production, German Factory Orders, Revised GDP figures, Retail Sales, and Final Employment Change numbers are all released; Rest of the World: China Caixin Manufacturing PMI; Japan Capital Spending and Final Manufacturing PMI; Switzerland: Foreign Currency Reserves; all feature across the week.

AUD
AUD against the US dollar started the week at six-week lows as Australian GDP looms this Wednesday. However, the little-Aussie-battler managed to recover 0.8% against the Greenback as it was hit with the combination of poor US data and growing trade tensions with Argentina and Brazil.

Australia’s current account surplus widened to AUD 7.86 billion in Q3 from a downwardly revised AUD 4.67 billion in Q2. This beat market expectations and is the second straight quarter of current account surplus and the biggest value since 1959.

September’s quarterly GDP for Australia is due on Wednesday with its key component data in the form of company profits already printing at -0.8%. Q3 growth figures are expected to show a slight improvement to 1.7% from the 1.4% seen in Q2 but the latest company profits released will not help matters. The Q2 GDP number was the lowest since the global financial crisis.

The RBA met on Tuesday and kept rates on hold at a record low of 0.75% as expected. Members from the RBA stated that they will continue to monitor the labor market and reiterated that it was reasonable to expect an extended period of low interest rates due to domestic and global factors.

USD
The US dollar was weaker over Monday’s European and US trade sessions. The Greenback was pressured by a series of negative data releases including the ISM Manufacturing PMI that printed below the market expectation of 49.2 coming in at 48.1. New trade tensions with Argentina and Brazil also compounded towards US dollar weakness as President Trump has announced new tariffs on steel and aluminium imports into the US from both countries.

Other key data this week to watch comes in the form of ADP Non-Farm Employment change on Wednesday, ISM Non-Manufacturing PMI on Thursday, and the all-important Non-farm numbers on Friday. Given recent poor data from the States, the US dollar could be in for a bumpy ride.

GBP
Despite election news dominating the Pound’s movement, a wave of important UK data is due this week. A trio of PMI prints are due with manufacturing data kicking off the week for the Pound printing above expectation at 48.9. Into Tuesday we have construction numbers and services data on Wednesday.

In the UK the polls have started to narrow causing market nervousness over Sterling. There are currently three possible outcomes being mooted which include a Tory majority, coalition or a Tory minority government. The price for the latter two alternatives would be a referendum, which may see GBP supported with a move higher. A Tory majority would undoubtably result in Sterling strength.

EUR
AUD/EUR is currently up 0.2% with more upside potentially being offered in the week ahead. Trouble is currently brewing in Europe with French train strikes looming and there has been talk of a potential German government coalition collapse before Christmas. With European GDP due out on Thursday the Euro is poised for potential further losses.

Rest of the World
CHF – Switzerland’s consumer prices ticked 0.1% lower year-on-year in November following a 0.3 percent fall in the previous month. JPY – Japan’s Capital Spending printed at 7.1% beating the market expectations of 5.1% and their Manufacturing PMI was also marginally stronger than expected. South Korea’s economy advanced 2.0% year-on-year in the third quarter of the year, matching growth for the previous period.

Event Wrap
Monday
AUD – Building Approvals
AUD – Company Operating Profits
JPY – Capital Spending
JPY – Final Manufacturing PMI
CNY – Caixin Manufacturing PMI
EUR – German Manufacturing PMI
GBP – Manufacturing PMI

Tuesday
EUR – ECB President Lagarde Speaks
CAD – Manufacturing PMI
USD – ISM Manufacturing PMI
AUD – Current Account
AUD – Cash Rate
AUD – RBA Rate Statement
GBP – Construction PMI

Wednesday
NZD – ANZ Commodity Prices
AUD – GDP
CNY – Caixin Services PMI
EUR – Final Services PMI
GBP – Final Services PMI
USD – ADP Non-Farm Employment Change

Thursday
CAD – BOC Rate Statement
CAD – Overnight Rate
USD – ISM Non-Manufacturing PMI

USD – FOMC Member Quarles Speaks
NZD – RBNZ Gov Orr Speaks
AUD – Retail Sales
AUD -Trade Balance
EUR – German Factory Orders
EUR – Retail Sales
EUR – Final Employment Change
EUR – Revised GDP
EUR – Eurogroup Meetings
USD – Trade Balance
USD – Unemployment Claims
CAD – Trade Balance

Friday
USD – FOMC Member Quarles Speaks
USD – Factory Orders
EUR – German Industrial Production
CHF – Foreign Currency Reserves
EUR – ECOFIN Meetings
CAD – Employment Change
CAD – Unemployment Rate
USD – Average Hourly Earnings
USD – Non-Farm Employment
USD – Unemployment Rate

Disclaimer
Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.
The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it

by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may

be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

November 26, 2019

Market Outlook

US Stocks rebounded on Friday after President Trump stated he is “very close” to a trade deal with China. The British pound fell 0.7% against the US dollar after November’s PMI data signalled deeper contraction in the manufacturing and service sectors with investors also becoming more cautious ahead of December General Election. The Aussie dollar was pressured on Friday following improved US data with US manufacturing PMI posting above the the 51.5 forecast at 52.2.

 

Week Ahead

Australia:RBA Deputy Gov Debelle and Gov Lowe Speak, Private Capital Expenditure and New Home Sales figures are released; US: 2nd estimate of Q3 GDP growth, personal income and outlays, PCE prices, durable goods and new and pending home sales; Eurozone: Germany retail sales, consumer and business confidence figures are released; Rest of the World: China NBS PMIs and industrial profits; Japan industrial output, retail sales and consumer confidence figures all feature across this week.

 

AUD

It is fairly light on the data front this week for Australia.With not much domestically to influence AUD it will be left to other data releases across the globe to dictate its performance. The headline act this week for Australia will be a speech from the RBA’s governor Philip Lowe entitled “Unconventional Monetary Policy: Some Lessons from Overseas”. The speech will be taken as guidance about the RBA’s thinking in relation to quantitative easing, negative interest rates, and other forms of unusual policy. Other important releases which could impact AUD include New Home Sales and the quarterly Private Capital Expenditure figure seen as an important indicator of economic health in the region.

 

USD 

US markets and US data improved last week. The combination of renewed trade talks between the US and China and the release of positive data helped push the greenback higher. Manufacturing PMI posting above the the 51.5 forecast at 52.2 and stronger Consumer Sentiment numbers and Non-Manufacturing figures also helped promote USD strength. It’s a big week for the US dollar with Q3 GDP growth, personal income, PCE prices, durable goods and new and pending home sales all set to feature.

GBP

UK Public Sector Net Borrowing for October increased to £10.5 billion, above the £8.6 billion market expectation. The Labour Party (opposition party) manifesto was released Thursday last week and has been criticized as unworkable. Analysts have suggested that the UK economy could crash if Labour were to be elected, and overseas investment would seek to find other places to invest. If the electorate decides it is time to change from a Conservative government, this will bring excessive volatility for GB. Only second tier data features this week for the Pound and the direction of Sterling will be dictated by political and Brexit related events.

 

EUR

Europe saw an improvement in manufacturing numbers on Friday. The Euro moved higher against the US dollar and the ECB’s De Guindos closed a quiet day of trading by saying the “risks still remain to the downside.” for the single currency. Newly elected ECB President Lagarde also made her first major speech on monetary policy. Later tonight will see the release of German Ifo business confidence numbers which will provide details on European growth.

 

Rest of the World

Bank of Canada (BoC) Governor, Poloz, said monetary policy was “about right”, and as such any thoughts about rate cuts were reduced again. Oil prices have rebounded, helping to boost demand for commodity currencies like the CAD and NOK.

 

Event Wrap

Monday

EUR – German Ifo Business Climate

 

Tuesday

NZD – Retail Sales

AUD – RBA Deputy Gov Debelle Speaks

AUD – RBA Gov Lowe Speaks

EUR – German GfK Consumer Climate

 

Wednesday

USD – Richmond Manufacturing Index

USD – New Housing Sales

USD – Consumer Confidence

NZD – RBNZ Financial Stability Report

 

NZD – RBNZ Gov Orr Speaks

USD – Durable Goods Orders

USD – Prelim GDP

USD – Unemployment Claims

 

Thursday

USD – Chicago PMI

USD – Personal Spending

USD – Core PCE Price Index

USD – Crude Oil Inventories

USD – Beige Book

JPY – Retail Sales

NZD – ANZ Business Confidence

AUD – Private Capital Expenditure

CAD – Current Account

EUR – German Prelim CPI

 

Friday

JPY – Unemployment Rate

JPY – Industrial Production

JPY – Consumer Confidence

AUD – HIA New Home Sales

AUD – Private Sector Credit

GBP – GfK Consumer Confidence

EUR – German Retail Sales

EUR – Unemployment Rate

EUR – CPI Flash Estimate

CAD – GDP

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

September 23, 2019

Market Outlook

The S&P 500 dropped 0.5% on Friday, US interest rates fall and Australian factory activity contracts in the month of September to 49.4 signaling the first monthly contraction since the survey began in May 2016. Australian employment figures also fell for the first time since May.

Week Ahead

Key economic releases from across the globe this week include: Australia: It’s light on the economic docket this week in Australia. Flash Manufacturing and flash services PMI feature on Monday with RBA Governor Lowe speaking on Tuesday; US: Quarter 2 GDP growth, personal income and outlays, PCE price index, durable goods orders, and pending home sales; UK: Governor Carney of the BOE will be speaking along with MPC members Tenreyro and Saunders. Public sector net borrowing and CBI factory orders are also revealed; Eurozone: ECB President Draghi speaks, the Eurozone business survey and monetary indicators are revealed along with Germany consumer morale; Rest of the World: The Bank of Japan will release the minutes of its last monetary policy meeting and the Reserve Bank of New Zealand will deliver its latest monetary policy decision on Wednesday.

AUD

A mixed beginning to the week for AUD as data released showed a fall in factory activity but a rise in both services and business activity. Both latter readings posted an above 50 reading signaling contraction in the region boosting AUD early on in trading. The ASX 200 is also trading at a seven-week high currently. Aussie-US fell to three-week lows on Friday amidst growing trade war tensions between the US and China. The Australian dollar and the global share markets ‘copped’ most of the pressure with AUD recent gains reversing and the S&P 500 falling 0.5% on the day. The latest trade war concerns have come about due to Chinese officials cancelling several agricultural visits in America. RBA Governor Lowe will be speaking ahead of the RBA’s meeting next week and is expected to highlight the Central Bank’s plans for further rate cuts. Markets are currently pricing in an 80% chance of a rate cut come October 1st.

USD

Data last week from the US featured a better than expected Philly Fed manufacturing index reading which printed at 12.0 beating the proposed 10.9 number. The Fed Reserve cut interest rates in the latest twist in monetary policy to support weaker global growth and the US Dollar rebounded higher on Wednesday as some investors were hoping for further rate cut signals by policymakers which failed to materialise. Key economic releases this week out of the US include service and manufacturing PMI readings, crude oil inventories, final GDP, and unemployment claims. Several FOMC members will feature all of which have the potential to move markets.

GBP

In the UK retail sales fell 0.2% in August in line with market expectations. The BOE left interest rates unchanged at 0.75% as expected but warned that Brexit uncertainty is causing the economy to slow, damaging productivity and business investment. The BOE did acknowledge that if the UK exits the EU smoothly then it would consider its long-term view of raising interest rates which would boost the pound. However, the risk of a no-deal Brexit persists even though European Commission President Jean Claude Juncker’s words last week impacted the Pound significantly when he announced that he thinks a Brexit deal can be reached by October 31st. He stated, “I think we can have a deal. I am doing everything to have a deal because I don’t like the idea of a no-deal because I think this would have catastrophic consequences for at least one year.” The Supreme court judgements on the prorogation of Parliament are due this week either Monday or Tuesday and it will be interesting to see how the Pound if affect by this ruling and if this will have a damaging effect on PM Boris Johnson’s position as leader.

EUR

The Aussie dollar fell marginally against the Euro last week down 0.1%. ECB governing council member Rehn stated that recent data pointed to a muted inflation outlook for a long time in the Eurozone. Key European data out this week includes the German IFO Business Climate, German manufacturing and services PMI and ECB President Mario Draghi will be speaking. His address has the potential to move the market.

Rest of the World

The Kiwi-dollar hit a fresh four-week low on Friday, Hong Kong August inflation rises to a three-year high, and China’s one-year loan prime rate is set at 4.2%in September down from 4.25% in the previous month. Stocks in the Eurozone hit fifteen-month high and monthly retail sales out of Canada rose 0.4% in the month of July.

Event Wrap

Monday

AUD – Flash Manufacturing PMI

AUD – Flash Services PMI

JPY – Bank Holiday

CNY – CB Leading Index

EUR – German Flash Manufacturing PMI

EUR – German Flash Services PMI

EUR – ECB Draghi Speaks

GBP – MPC Member Tenreyro

USD – Flash Manufacturing PMI

USD – Flash Service PMI

USD – FOMC Member Williams Speaks

Tuesday

AUD – RBA Governor Lowe Speaks

USD – FOMC Member Bullard Speaks

JPY – BOJ Kuroda Speaks

EUR – German IFO Business Climate

GBP – Public Sector Net Borrowing

Wednesday

NZD –Trade Balance

NZD – Official Cash Rate

NZD – RBNZ Rate Statement

JPY – Monetary Policy Meeting Minutes

JPY – BOJ Core CPI

EUR – German GFK Consumer Climate

USD – FOMC Member Evans Speaks

Thursday

USD – FOMC Member George Speaks

USD – New Home Sales

USD – Crude Oil Inventories

USD – Final GDP

USD – Goods Trade Balance

USD – Unemployment Claims

EUR – ECB Economic Bulletin

EUR – ECB president Draghi Speaks

GBP – BOE Governor Carney Speaks

Friday

USD – FOMC Member Bullard Speaks

USD – Pending Home Sales

USD – FOMC Press Conference

USD – FOMC Member Clarida Speaks

USD – Core Durable Goods Orders

USD – Personal Spending

USD – FOMC Member Quarles Speaks

USD – Personal Income

GBP – GFK Consumer Confidence

GBP – MPC Member Saunders Speaks

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

September 17, 2019

Market Outlook

An attack on a Saudi oil facility over the weekend has spooked financial markets. Crude oil has appreciated 14% this morning as a result of the attack instigated by rebels in Yemen. Currencies linked to oil-exporting nations such as Canada and Norway have been affected the most. The Aussie dollar remains buoyant against the Greenback and is offered close to six-week highs currently. Central banks take the spotlight this week providing updates in relation to monetary policy with the Fed Reserve expected to cut rates.

Week Ahead

Central banks in the US, UK, Japan and China will provide an update on monetary policy. Australia: It’s pretty light on the economic docket out of Australia this week. Key data comes in the form of monetary policy minutes on Tuesday and the unemployment rate and RBA bulletin on Thursday; US: The Fed Reserve are set to cut rates this week on Wednesday. Other notable publications include industrial production, existing home sales, building permits and housing starts, Philly Fed Manufacturing Index and the New York Empire State Manufacturing Index; Eurozone: flash consumer confidence, construction output and current account along with Germany investor morale and producer prices; Rest of the World: The Bank of Japan holds its monetary policy meeting on Thursday and New Zealand‘s Q2 GDP growth and current account will be keenly watched.

AUD

The Aussie dollar was holding firm against the US dollar and the Euro as Markets opened on Monday. AUD/USD remains at six-week highs as markets prepares for the Fed Reserve to cut interest rates this Thursday by 25 basis points. The market has already priced in an 87% chance of this happening and a cut greater than this could see the Aussie dollar push higher. It’s light in terms of data out of Australia this week with investors keeping a keen eye on the RBA minutes due on Tuesday.

USD

Geopolitical uncertainty has increased due to the attack on a Saudi oil facility over the weekend. As a result, gold, the Japanese Yen and Swiss Franc have all strengthened off the back of safe-haven demand. Data last week form the US showed a stronger-than-expected US retail sales report alleviating fears of recession and Secretary Mnuchin reminded the markets that President Trump is prepared to keep tariffs in place and raise them if necessary. This gave the dollar some support against the commodity currencies like the Aussie dollar. The dollar also appreciated against the Euro due to additional easing from the ECB which President Trump seemed to be unhappy about stating that depreciating the euro against the dollar was hurting US exports.” Trade talks are still in focus with it being reported that the US could offer China an interim trade deal. Last week saw planned tariffs on Chinese items postponed for a two week period as a good will gesture. The market’s focus this week is the Fed Reserve interest rate meeting on Wednesday.

GBP

The British Pound appreciated over 4% against the US dollar last week and the chances of the UK leaving Europe without a deal reduced. The High Court will decide this week if it was lawful for the government to prorogue parliament. On Thursday this week the Bank of England (BOE) will release its Monetary Policy Summary along with their Official Bank Rate Vote. The next BOE rate move will greatly depend on how Brexit progresses, which is still uncertain. Other key data this week includes the release of UK inflation and retail sales, but Brexit developments will still dictate the Pound’s movement for weeks to come.

EUR

The Aussie dollar is back to levels previously seen before the ECB cut rates and started a fresh round of money printing. Shortly after the ECB announced a host of changes to their monetary policy, AUD weakened and flirted with retracing below 0.62. With the intention of stimulating the eurozone economy, the ECB cut the deposit facility interest rate by 0.1% to -0.5% and restarted the quantitative easing engine to ensure that 20 billion Euros per month will be injected into the system from November 1st this year. The central bank further introduced an interest rate tiering system so that banks are not penalised as much by negative interest rates and changed their forward guidance saying that their policies would continue “as long as necessary”.

Rest of the World

It’s a big day on Thursday as several central banks take the stage to set their interest rates. The Bank of England, Swiss National Bank and the Bank of Japan are all expected to hold rates while Norges Bank will likely hike rates by 25 basis points. The People’s Bank of China will also provide an update on its new loan prime rate (LPR) which was previously set at 4.25%. The new LPR replaces the bank’s old benchmark lending rate and has been designed to support the economy during trade tensions with the US.

Event Wrap

Monday

JPY – Bank Holiday

CNY – Fixed Asset Investment

CNY – Industrial Production

CNY – Retail Sales

CNY – Unemployment Rate

USD – Empire State Manufacturing

Tuesday

NZD – Westpac Consumer Sentiment

AUD – Monetary Policy Minutes

AUD – HPI (Quarterly)

USD – Industrial Production

EUR – German ZEW Economic Sentiment

CAD – Manufacturing Sales

Wednesday

NZD – GDT Price Index

NZD – Current Account

JPY – Trade Balance

AUD – MI Leading Index

AUD – CB Lending Index

GBP – Core CPI

GBP – PPI Input

EUR – Final Core CPI

CAD – CPI

USD – Building Permits

USD – Housing Starts

Thursday

NZD – GDP

AUD – Employment Change

AUD – Unemployment Rate

AUD – RBA Bulletin

USD – FOMC Economic Projections

USD – FOMC Statement

USD – Federal Fund Rate

USD – FOMC Press Conference

USD – Crude Oil Inventories

USD – Philly Fed Manufacturing Index

USD – Current Account

USD – Unemployment Claims

JPY – Monetary Policy Statement

JPY – BOJ Policy Rate

JPY – BOJ Press Conference

EUR – Current Account

GBP – MPC Official Bank Rate Vote

GBP – Monetary Policy Summary

GBP- Official Bank Rate

Friday

NZD – Credit Card Spending

EUR – German PPI

GBP – BOE Quarterly Bulletin

CAD – Core Retail Sales

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

September 9, 2019

Market Outlook

Equities markets were relatively unchanged on Friday and the US Non-farm payroll numbers disappointed resulting in the Aussie dollar trading at one-month highs versus the Greenback. Political uncertainty has increased for the UK with Tory MPs resigning over the weekend.

Week Ahead

Key economic releases from across the globe this week include: Australia: Home Loans, Business and Consumer Confidence ; US: inflation rate, retail sales, Michigan’s consumer sentiment and JOLTs job openings; UK: monthly GDP, trade balance and unemployment; Eurozone: the European Central Bank (ECB) will probably unveil its stimulus package on Thursday, Germany Trade Balance and Eurogroup Meetings; Rest of the World: Chinese foreign trade and inflation.

AUD

The Aussie dollar is higher this morning against most of its major counterparts. AUD/EUR is at a six-week high and AUD/USD is at the highest level since August 1st, 2019. The recent highs versus both the Euro and the US dollar are not due to AUD strength but rather Euro weakness as the ECB prepares for an interest rate cut and a re-opening of its money printing program. US jobs numbers disappointed on Friday printing only 130K versus a market expectation of 163K. As a result of the weak numbers the US dollar was sold with the Aussie dollar capitalizing on this and brushing aside soft retail sales and GDP numbers printed earlier in the week. Data this week locally is light with business confidence and consumer sentiment figures out Tuesday and Wednesday respectively.

USD

The US dollar ‘s dominance came to a halt on Friday as non-farm payroll figures disappointed.  Dollar selling had stalled prior to the release of the Friday figure but continued when the numbers printed. A 25 basis-point cut in interest rates by the Federal Reserve when they meet 19th Sept is fully priced in for its September policy meeting and the probability of a 50-basis-point cut has increased from 0% to 30%. The recent jobs data suggests that jobs are settling at lower levels but still remain at respectable levels.

GBP

Over the weekend ex-work and pensions secretary Amber Rudd quit Boris Johnson’s cabinet. Rudd was very outspoken on the governments approach to Brexit stating that the government has “no formal negotiations” with the EU about a new deal and that any conversations had are just that, conversations. Amber Rudd stated that the Mr. Johnson’s decision to expel 21 MPs from the parliamentary Conservative party an “act of political vandalism”, after her former colleagues rebelled last week over a bill designed to avoid a no-deal Brexit. The Pound has remained resolute amidst political uncertainty and should continue to do so up until the possibility of a general election being called. It now looks as though legislation will be pushed through Parliament preventing the UK leaving the EU without a deal in place. This has held GBP firm but the way ahead for the Pound is still very uncertain.

EUR

Aussie-Euro starts the week at a six-week high with the European Central Bank (ECB) expected to cut interest rates and potentially re-start a money printing exercise which was last seen in 2017. Key data out of Europe this week includes German Trade Balance and European Industrial Production. However, the spotlight will be firmly on the ECB come this Thursday with releases in the form of ECB’s refinancing rate, monetary policy statement and post-policy press conference.

Rest of the World

Japan’s Q2 growth was revised down to 0.3%. The NIKKEI 225 increased to 5-week highs along with their current account reading pushing to the largest level in 4 months. New Zealand’s Manufacturing Sales fell 0.4% year-on-year in Q2 and Chinese Imports have dropped 5.6% from the previous year. Canada has reported that business moral is currently at a 10-month high with the Ivey PMI showing an increase to 60.6 for the month of August from a previous reading of 54.2.

Event Wrap

Monday

AUD – Home Loans

JPY – Current Account

JPY – Final GDP

EUR – German Trade Balance

GBP – GDP

GBP – Manufacturing Production

GBP – Industrial Production

Tuesday

AUD – NAB Business Confidence

CNY – CPI

CNY – PPI

USD – Consumer Credit

GBP – Average Earnings Index

GBP – Claimant Count

GBP – Unemployment Rate

CAD – Housing Starts

CAD – Building Permits

Wednesday

NZD – Visitor Arrivals

AUD – Westpac Consumer Sentiment

CNY – Foreign Direct Investment

USD – PPI

Thursday

AUD – MI Inflation Expectation

USD – CPI

USD – Unemployment Claims

USD – Crude Oil Inventories

EUR – Industrial Production

EUR – Refinancing Rate

EUR – Monetary Policy Statement

EUR – ECB Press Conference

Friday

NZD – Business NZ Manufacturing Index

CNY – Bank Holiday

USD – Crude Oil Inventories

USD – Retail Sales

USD – Preliminary Consumer Sentiment

USD – Federal Budget Balance

EUR – Trade Balance

EUR – Eurogroup Meetings

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

September 2, 2019

Market Outlook

Equities markets were relatively unchanged on Friday as the US dollar pushed higher. The Aussie dollar begins the week trading close to 10—year lows. Continuing Greenback strength has seen the Kiwi dollar and the Euro drop to 4-year and 2-year lows respectively.

Week Ahead

Key economic releases from across the globe this week include: Australia: The RBA will decide on monetary policy, Q2 GDP numbers, trade balance and retail sales; US: with jobs report, ISM PMIs, trade data, and factory orders; UK: Manufacturing and Construction PMI, Retail Sales numbers and Consumer Inflation Expectations are all released; Eurozone: Eurozone retail trade; Germany factory orders and industrial output; Rest of the World: Japan household spending; China Caixin PMIs; and Canada will be deciding on monetary policy.

AUD

The Aussie dollar could be pressured this week as Wednesday’s GDP figure will shine more light on the current state of the Australian economy. It’s clear that Australia dollar is currently experiencing somewhat of a turbulent time and with economic releases this week in the form of Retail Sales numbers, the RBA Rate Statement on Tuesday and GDP numbers, you can be sure to expect movement in the currency. Last quarter’s annual GDP reading printed at 1.8%, which was the lowest rate since the GFC.

USD

The US dollar continues to strengthen against a basket of currencies as it benefits from being the safe haven of choice and having the highest interest rates out of nations in the developed world. Data from the States last week was mixed with the dollar remaining strong even with the downgrade of US second quarter GDP last Thursday which showed that the US economy had only grown by 2 rather than the expected 2.1% figure. Consumer Sentiment also fell to 89.8 versus a preliminary figure of 92.1. This was attributed to trade tensions. With the US economy slowing and the Fed cutting interest rates for the first time since 2008 last month, and more cuts on the horizon, why is the dollar still strengthening? The US economy is still considered more secure than others especially with the UK experiencing a troubled divorce from Europe and the Eurozone on the brink of a recession.

GBP

The downside risk for the Great British Pound has increased following PM Boris Johnson’s successful move to suspend Parliament for five weeks. With approximately two months until the Brexit deadline the prospect of the UK leaving Europe without a deal continues to ‘spook’ financial markets pushing the Pound lower. As the deadline approaches for Brexit, investors are preparing for large currency swings as the Pound once again finds itself under 1.22 versus the US dollar with some results suggesting a handle of 1.10 or lower if a deal cannot be formed. GBP continues to be moved around against a basket of currencies and has lost most of its recent dominance against the Aussie dollar which saw the Pound push close to GBP/AUD 1.90 (AUD/GBP 0.5260) at the beginning of May this year. Data out this week from the UK includes Manufacturing and Construction PMI, Retail Sales numbers and Consumer Inflation Expectations.

EUR

Eurozone inflation came in weaker on Friday pushing the Euro lower and the Aussie-Euro cross to the highest reading in a month. The Euro has been dogged recently due to consistently poor data and it appears that the region is on the brink of a recession. German Retail Sales numbers came in lower than expected for the month of July and CPI data also missed the market expectation of 1% only printing 0.9%. Key data on the European docket this week will see the release of Eurozone retail trade; Germany factory orders and industrial output.

Rest of the World

China’s factory activity contracted in August for the 4th consecutive month to 49.5 from the previous figure of 49.7. This was attributed to the Trade War tensions between China and the US along with slow domestic demand. Canada will feature heavily this week in terms of data releases. Data has been improving lately with monthly Retail Sales and GDP printing better than expected. The latest round of data to be released this week includes the BOC Rate Statement, Current Account figures, Employment numbers and Trade Balance. Traders have increased bets on the BOC cutting rates this week which has limited any upside moves for the Loonie (CAD).

Event Wrap

Monday

AUD – AIG Manufacturing Index

AUD – Company Operating Profits (Quarterly Figure)

AUD – MI Inflation Gauge

AUD – Commodity Prices

NZD – Overseas Trade

CNY – Caixin Manufacturing PMI

GBP –Manufacturing PMI

USD – Bank Holiday (Labour Day)

CAD – Bank Holiday (Labour Day)

Tuesday

AUD – Retail Sales

AUD – Current Account

AUD – Cash Rate

AUD – RBA Statement

USD – Final Manufacturing PMI

CAD – Manufacturing PMI

EUR – PPI Figure

GBP – BRC Retail Sales Monitor

GBP – Construction PMI

Wednesday

NZD – GDT Price Index

NZD – ANZ Commodity Prices

AUD – AIG Services Index

AUD – GDP (Quarterly Figure)

CNY – Caixin Services PMI

GBP – Services PMI

GBP – Retail Sales

EUR – German Final Services PMI

CAD – Trade Balance

USD – ISM Manufacturing PMI

USD – Trade Balance

Thursday

CAD – BOC Rate Statement

USD – Beige Book

AUD – Trade Balance

USD – ADP Non-Farm Employment Change

USD – Final Service PMI

USD – Unemployment Claims

CAD – Current Account

EUR – German Factory Orders

Friday

AUD – AIG Construction Index

NZD – Building Consents

USD – Crude Oil Inventories

USD – Factory Orders

USD – ISM Non-Manufacturing PMI

USD – Unemployment Rate

USD – Non-Farm Employment Change

USD – Average Hourly Earnings

GBP – Consumer Inflation Expectations

EUR – German Industrial Production

EUR – Final Employment Change (Quarterly Figure)

EUR – Revised GDP (Quarterly)

CAD – Employment Change

CAD – Unemployment Rate

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

August 26, 2019

Market Outlook

Equities markets retreat as the US-China trade war escalates with both sides unveiling fresh tariffs on each other. Safe haven currencies were the major benefactors of the unexpected trade war drama. Fed Reserve Chair Powell’s address was slightly downbeat and overshadowed by the events between China and the US.

Week Ahead

Key economic releases from across the globe this week include: Australia: Building Permits, Private Sector Credit and RBA Deputy Gov. Debelle Speaking; US: Second Estimate of Q2 GDP growth will be keenly watched alongside Personal Income and Outlays, PCE price Index, and Durable Goods Order; UK: MPC Member Tenreyro Speaks, Gfk Consumer Confidence, Net Lending to Individuals and Mortgage Approvals are all released; Eurozone: Eurozone Flash Inflation, German IFO business Climate and the Jobless Rate are in focus; Rest of the World: Japan Consumer Confidence, Industrial Output, and Retail Sales; China NBS PMIs; and Canada and India release Q2 GDP growth rates.

AUD

The Aussie dollar nears 10 year lows this morning against several currencies following Friday’s fresh round of trade war tariffs. Data is light this week out of Australia with the only top tier economic releases coming in the form of Building Approvals, Private Capital Expenditure and Reserve Bank Deputy Governor Debelle speaking tomorrow. Investors will look to data out of the US this week in the form of preliminary GDP and Consumer Confidence numbers to dictate the AUD/USD cross. The latest round of trade war tariffs between China and the US does nothing but heap pressure on a globally exposed currency like the Australian dollar as investors seek safety in the Japanese Yen and US Dollar following the trade war spat.

USD

Jerome Powell’s address at the Jackson Hole Symposium was slightly subdued and somewhat overshadowed by fresh tariffs imposed by China and the US. Powell commented that the domestic economy was in a “favourable place” and that inflation was tracking closer to the Fed’s 2% target figure. He acknowledged that the US economy still faces significant risks, but his address was overshadowed by China announcing tariffs to the tune of $75 billion on US imports. This sparked a tit-for-tat response from President Trump which will see a 25% tariff on $250 billion in goods from China rising to 30% starting October 1st. Data from the US this week features second estimate of Q2 GDP growth, personal income and outlays, PCE price index, and durable goods orders.

GBP

GBP gained ground last week against the Aussie dollar as Boris Johnson met German Chancellor Angela Merkel. Merkel suggested that a solution to the Irish border issue could be found before Britain leaves the European Union on Oct. 31 lifting the Pound 1.4% against the Aussie dollar. AUD/GBP is now at its lowest level since July.  However, the Pound retraced this morning on the back of comments made by UK PM Boris Johnson over the weekend who stated to the BBC News channel that the chances of the UK leaving the EU without a deal are now “touch and go.” The Pound had experienced its best day of trading in the European markets in over three months on Friday amidst renewed hopes that an agreement could be reached.

EUR

AUD/EUR has fallen over 50 basis points nearing ten-year lows. Italian politics currently remains the key focus in Europe with Italian president Sergio Mattarella giving his parties until Tuesday to find a new government. The parties have informed Mattarella that more time is needed to solve the ongoing government crisis following the resignation of former Prime Minster Giuseppe Conte last week. Key data this week from the Eurozone includes Flash Inflation, German IFO business Climate numbers and the Jobless Rate.

Rest of the World

The Kiwi dollar was a big mover last Friday, jumping from a three and-a-half-year low after the New Zealand Central Bank stated they are “pleased” with where interest rates currently sit. This dampens expectations of further rate cuts to follow recent aggressive easing. The Brazilian Real fell to 1-year low on Friday following the escalation in the China-US trade war.

Event Wrap

Monday

NZD – Trade Balance

EUR – German Ifo Business Climate

GBP – Bank Holiday

USD – Core Durable Goods

* G7 Meeting – All Day

Tuesday

AUD – RBA Deputy Gov. Debelle Speaks

USD – FOMC Member Bullard Speaks

EUR – German Final GDP (Quarterly)

GBP – MPC Member Tenreyro Speaks

Wednesday

AUD – Private Capital Expenditure

AUD – Construction Work Completed

GBP – Nationwide HPI

EUR – M3 Money Supply

USD – Consumer Confidence

Thursday

AUD – Flash Manufacturing PMI

AUD – Private Capital Expenditure

NZD – ANZ Business Confidence

JPY – Consumer Confidence

USD – Prelim GDP

USD – Goods Trade Balance

USD – Unemployment Claims

CAD – Current Account

EUR – German CPI

EUR – German Unemployment Change

Friday

AUD – Building Approvals

AUD – HIA New Home Sales

AUD – Private Sector Credit

NZD – Building Consents

USD – Personal Spending

USD – Core PCE Price Index

USD – Chicago PMI

GBP – GfK Consumer Confidence

GBP – M4 Money Supply

GBP – Mortgage Approvals

GBP – Net Lending

EUR – CPI Flash Estimate

EUR – Unemployment Rate

EUR – German Retail Sales

CAD – GDP

 

Disclaimer

Any advice contained in this email is general financial product advice only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this email, Kapital FX Pty Limited (ABN 18 611 822 390 & ASIC AFSL Number: 493372 and AUSTRAC Independent Remittance Dealer (IRD) Reporting Entity Number 63528 on the Remittance Sector Register) (Kapital FX), recommends that you consider whether it is appropriate for your circumstances. If this email contains reference to any financial products, Kapital FX recommends you consider the Product Disclosure Statement (PDS) or other disclosure document available from Kapital FX or on our website www.kapitalfx.com.au, before making any decisions regarding any products.

The information contained in this email is confidential and may be legally privileged. No confidentiality or privilege is waived or lost by any mis-transmission. It is intended only for the stated addressee(s) and access to it by any other person is unauthorized. If you are not an addressee, you must not disclose, copy or circulate this information. Such unauthorized use may be unlawful. If you have received this email in error, please inform Kapital FX immediately and delete it and all copies from your system. While Kapital FX makes every effort to keep our network free from viruses we take no responsibility for any computer virus which might be transferred by way of this email. The views expressed in this email are those of the sender and may not be representative of the views of Kapital FX. Information in this e-mail is without warranty or representation whatsoever whether expressed or implied and Kapital FX will not be held liable for any inaccuracies or any losses, whether direct or indirect arising from information provided herein. Kapital FX does not represent, warrant or guarantee that the integrity of this communication has been maintained nor that the communication is free of errors, virus, interception or interference. Persons including prospective purchasers should make their own enquiries and obtain their own independent legal, financial and other advice in order to ascertain what further investigations they should make and to verify the accuracy of such information and of the images. The copyright in this e-mail and all its attachments and content, vests in Kapital FX.

August 19, 2019

Market Outlook

Equities markets edged higher on Friday. The S&P closed 1.4% higher and has started to reclaim recent losses with the news that US-China trade talks are progressing.

Week Ahead

Key economic releases from across the globe this week include: Australia: Monetary Policy Meeting Minutes, CB Leading Index and Flash Manufacturing PMI; US FOMC Member Quarles Speaks, Unemployment Claims, Flash Manufacturing PMI, FOMC Meeting Minutes and Existing Home Sales; UK Public Sector Net Borrowing, CBI Industrial Order Expectations and CBI Realized Sales; Eurozone: Eurozone Current Account, Final Core CPI, German PPI, ECB Monetary Policy Meeting, Consumer Confidence and German Flash Manufacturing PMI; Rest of the World: New Zealand PPI Input / Output (Quarterly Figure); Japanese Trade Balance; Canadian Manufacturing Sales; Russian Unemployment Rate and Retail Sales; Chile GDP.

AUD

Iron ore moved one percent higher on Friday and lifted the commodity linked Aussie dollar. Gains were slight but it was still a move in the right direction for AUD which appears to be trading within a tight range against the US dollar. News through the wires suggested that US-China trade talks are progressing in the right direction which has also lifted the Aussie from its worst one-day performance recorded last Wednesday. Data out this week from Australia is limited but markets await the RBA minutes on Tuesday which may give clues as to future interest rate decisions.

USD

Following positive Retail Sales out of the US on Friday the dollar index moved to one-month highs. Flight to safety is also helping the US dollar as global tensions persist with the protests in Hong Kong having potential to impact the US-China trade war. Analysts still predict a rate cut from the Fed before the close of this year with Reuters posting a 56 % chance of a 25 basis-point cut in September. It’s an important week in terms of data out of the US with key releases in the form of Unemployment Claims, Flash Manufacturing PMI, Existing Home Sales and FOMC Member Quarles Speaking on Wednesday. FOMC Meeting Minutes will be released this Thursday and the Jackson Hole Symposium is also scheduled for this weekend. This event is a big draw for Central bankers and this year’s theme will be focused on ‘The Challenges of Monetary Policy.’

GBP

GBP was the best performing currency last week moving from the 1.21 level to 1.2175 against the US dollar. Better than expected Retail Sales numbers from the UK lifted the Pound with a return to a data driven market. Of late, politics have dominated headlines and have been the main mover of Sterling. It’s light in terms of data out of the UK this week with the headline figure being Public Sector Net Borrowing late on Wednesday AEST.

EUR

The German government are considering ramping up their debt to boost growth. ECB Central banker Olli Rehn commented that the ECB is preparing a “very strong package” relating to easing measures. This has raised expectation of a further 12 months of QE and for the ECB to take significant action when they meet in September concerning interest rates.  AUD gained 0.3% against the Euro last week finishing at the highest level in three weeks. Key data out of Europe this week will be the Eurozone Current Account, Final Core CPI, the ECB Monetary Policy Meeting and Consumer Confidence. All releases that have the potential to move AUD/EUR.

Rest of the World

30-year UK government and US government bonds fell on Friday as investors were gripped by risk-off sentiment driving them to safe-havens. Bond yields fell below 1% and 2% respectively which was the first time this has occurred since records began. China has reduced its cost of business by 1% in a further attempt to support its economy.

Event Wrap

Monday

NZD – PPI

JPY – Trade Balance

EUR – Eurozone Current Account

EUR – Final Core CPI

Tuesday

AUD – Monetary Policy Meeting Minutes

EUR – German PPI

CAD – Manufacturing Sales

Wednesday

AUD – CB Leading Index

AUD – MI Leading Index

NZD – GDT Price Index

NZD – Credit Card Spending y/y

GBP – Public Sector Net Borrowing

USD – FOMC Member Quarles Speaks

CAD – CPI

Thursday

AUD – Flash Manufacturing PMI

CAD – Wholesale Sales

USD – Unemployment Claims

USD – Flash Manufacturing PMI

USD – FOMC Meeting Minutes

USD – Existing Home Sales

EUR – ECB Monetary Policy Meeting Accounts

EUR – German Flash Manufacturing PMI

Friday

NZD – Retail Sales

EUR – Consumer Confidence

CAD – Core Retail Sales

August 13, 2019

Market Outlook

The Australian dollar’s short-term gains reversed on Friday evening following US and global shares market retracing with the S&P500 closing down 0.7%. Trade war concerns were the main driver of global selling following President Trump’s reluctance to form a deal with China.

Week Ahead

Key economic releases from across the globe this week include: Australia: consumer and business confidence figures, wage price index and employment figures; US the inflation rate, retail sales, industrial production, housing data and flash Michigan’s consumer sentiment; UK unemployment, wage growth, inflation and retail sales; Eurozone: Germany Q2 GDP, industrial production, flash employment change and trade balance; Rest of the World: Chinese industrial output, retail sales, fixed asset investment and house price index; Japanese machinery orders and corporate goods prices; Canadian Non-Farm Employment Change.

AUD

The Aussie dollar short-term gains were quickly washed away as trade war concerns still dominate markets with AUD/USD falling 0.2%. Against the British Pound the Australian dollar is approaching its 2019 highs as concerns regarding a no deal Brexit loom.  The RBA has reduced its growth forecast for the Australian economy for 2019 to 2.5% and further reduced its growth expectations for 2020. The ongoing trade war issues means that China will remain in focus this week. Globally exposed currencies like the Aussie dollar will remain at risk of manipulation as a result of ongoing US-China trade woes. Important data in the form of Australian job number due on Thursday this week will be closely watched by market participants and key ahead of the RBA’s meeting next month.

USD

The US dollar continues to remain strong against the Australian dollar with President Trump stating he is “not ready to make a deal” with China. This heaped more uncertainty on global markets causing a drive to safer assets. Against the British Pound the dollar is edging closer to 1.20 driving GBP/USD to a 30-month low. This week sees the US publish data in the form of their inflation rate, retail sales, industrial production, housing data and flash Michigan’s consumer sentiment.

GBP

Friday trading saw GBP fall against a basket of currencies as Q2 growth data reported that the economy had shrunk for the first time since 2012 and Brexit uncertainty still looms. On the back of this news the pound fell against the Aussie Dollar and visited the depths of 1.2028 against the US dollar. Growth for the UK remains above 1% but the recent negative GDP print has alarmed investors who are already poised for the UK to leave the EU this October absent of a trade deal. Data this week from the UK comes in the form of unemployment, wage growth, inflation and retail sales All have the potential to mover the already sensitive British Pound.

EUR

The Aussie dollar has enjoyed a 0.8% appreciation against the Euro and is managing to hold on to key psychological levels. Data out of the Eurozone this week will include Q2 GDP from Germany, industrial production, flash employment change and trade balance figures.

Rest of the World

Strong Canadian employment figures has pushed AUD/CAD to nearly nine-year lows. The spotlight will remain on China this week with industrial production, retail sales and the unemployment figures due out this Wednesday. Meanwhile, in other market news Fitch Ratings Agency raised Russia’s sovereign credit rating on Friday to ‘BBB’ from ‘BBB-’ citing a stable outlook. They noted that the main drivers behind the upgrade were due to a credible and consistent policy framework that will deliver improved macroeconomic stability. Central banks in New Zealand, India, Thailand and the Philippines all cut interest rates with the RBNZ going with 0.5% markets were not expecting. Strangely, the Australian dollar suffered at the hands of this.

Event Wrap

Monday

JPY – Bank Holiday

Tuesday

AUD – RBA Assistant Governor Kent Speaks

CNY – Foreign Direct Investment (13th – 15th)

CNY – New Loans

CNY – M2 Money Supply

EUR – German Final CPI

EUR – German ZEW Economic Sentiment

GBP – Average Earnings Index

GBP – Claimant Count Change

GBP – Unemployment Rate

USD – Core CPI

Wednesday

AUD – Westpac Consumer Sentiment

AUD – Wage Price Index

AUD – RBA Assistant Governor Debelle Speaks

CNY – Industrial Production

CNY – Retail Sales

CNY – Unemployment Rate

EUR – German Prelim GDP q/q

EUR – Flash GDP

EUR – Flash Employment Change

EUR – Industrial Production

GBP – CPI

USD – Import Price

Thursday

AUD – RBA Assist Gov Debelle Speaks

AUD – MI Inflation Expectations

AUD – Unemployment Change

AUD – Unemployment Rate

GBP – Retail Sales

CAD – Non-Farm Employment Change

USD – Core Retail Sales

USD – Philly Fed Manufacturing Index

USD – Retail Sales

USD – Empire State Manufacturing Index

USD – Prelim Nonfarm Productivity q/q

USD – Unemployment Claims

USD – Industrial Production

Friday

NZD – Business NZ Manufacturing Index

EUR – Trade Balance

USD – Building Permits

USD – Housing Starts