It has certainly been a volatile week, with an overload of information both locally and globally for markets to digest. Markets remained in a risk-averse mood, and equities have fallen sharply. The Aussie dollar has also underperformed, being the weakest G10 currency this week. Show More
Fed Chair Powell appears open to a slower pace of monetary tightening and equity markets like it. Back in October, Fed Chair Powell had suggested that “we're a long way from neutral at this point” – neutral interest rates being the point where monetary policy is neither helping nor hindering... Show More
Equities had a poor run this week, and Australian equities underperformed the Asian region, but nonetheless, the AUD moved towards 3 months highs as we saw an important week of economic updates for the domestic economy, which all in all were upbeat. The Aussie dollar was also helped by more... Show More
The US midterm elections delivered widely expected outcomes in terms of control of Congress. President Trump’s Republican colleagues strengthened their hold in the Senate but lost the House for the first time since 2010. Show More
Global markets remain skittish with a laundry list of reasons to worry – from the Italian budget, Fed tightening and rising US bond yields, Brexit and of course US-China trade tensions. Show More
In a previous update, we made the case for an Aussie dollar revival. We pointed out the mostly encouraging domestic data that aligns with the RBA’s optimistic growth outlook, an uptrend in key commodity prices and the possibility that the US dollar would struggle to rally further given how much... Show More
The Aussie dollar’s dip under 71 cents this week provided great fodder for newswires, as it printed lows since February 2016. But the more telling story is probably how little time it spent at such lows, and that it is higher over the week, close to 72 cents. Show More
The Australian economy is expanding at the fastest pace in 6 years... yet the Australian dollar hit its lowest level in more than 2yrs. Show More
The last week has seen global risk appetite improve, although the AUD has struggled to capitalise and any rallies have proved fleeting. We summarise key events in the market this week in the transcript and video below. Show More
The Australian dollar typically ignores local politics but this week it seems the turmoil in Canberra has been too great to ignore, knocking the Aussie sharply lower before trimming losses slightly once Scott Morrison was chosen. I discuss the context for the AUD fall and whether this focus on domestic... Show More
Weeks of quiet trade in the Australian dollar ended abruptly on Friday as AUD/USD sank under 73 cents to lows dating to January 2017. Turmoil in Turkey was the catalyst, as the Aussie showed its sensitivity to the global equity mood. But is there more to come? Show More
This week we saw monetary policy decisions in the US, UK and Japan. Only the Bank of England raised interest rates but it was clear that the Federal Reserve is by far the most confident of the major central banks, upgrading its assessment of US economic growth from "solid" to... Show More
The global risk mood has been strong for much of this week, but investor optimism was rattled once again by the latest skirmish in the US trade war with China. In our brief weekly markets video, I take a quick look at where we stand regarding US tariffs and how... Show More
This week AUD/USD fell to its lowest point since January 2017, close to 73 cents. Once again, much of this was simply due to the strength of the greenback, but there was also some pressure from the slide in the Chinese yuan. In our brief video, I take a look... Show More
The Australian dollar is on the back foot today as risk appetite sours, but it has mostly had a good week, reaching 6 week highs against the US dollar. Much of its strength stemmed from Australia's GDP report, where growth accelerated to above 3%. But the details of the report... Show More
Here is Westpac's brief weekly markets video. Last week's Australian wages and unemployment data reinforced our concern that wages growth will not accelerate any time soon. This poses danger to the outlook for both the RBA's inflation target and the government's budget position. The Aussie dollar however, looks relatively resilient... Show More
Just as the Fed looks set to finally hit its 2% inflation target, it releases a statement seemingly aimed at dampening expectations of faster rate hikes. In our brief weekly markets video, I discuss the US dollar and interest rate reaction to the FOMC statement and what this could mean... Show More
It seems that the rise in the US 10 year Treasury note yield that began in mid-April was the start of something big. In our brief weekly video, I discuss the factors driving the broad-based US dollar revival, including its breadth and how the dollar's yield backing is not just... Show More
China announced tariffs on US imports in retaliation for the US tariffs and then President Trump threatened tariffs on another $100bn of Chinese imports. So it has been a week of trans-Pacific trade tensions. But how worried should we be? In our weekly video, I briefly discuss the key points... Show More
The FOMC delivered the expected rate hike at last week's eagerly awaited meeting. But markets didn't quite get the hawkish tone expected in the quarterly projections. In our brief weekly video, I discuss the market response to the Fed and also the deepening market concern over protectionist trade policy. I... Show More
Malcolm, our Economics team does the longer term forecasts. In his monthly commentary on A$, Bill Evans wrote, ""We confirm our target for AUD to head to USD 0.70 through 2019."" His writeup is on p4 here: https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2018/August/WestpacMarketOutlookAugust2018.pdf
Peter, Westpac's year-end AUD forecast in the Feb 2018 monthly report was 0.72. End-Sep forecast was 0.74. And yes, they are sometimes revised! Commodity prices are indeed under pressure this week though our daily index is still in about the middle of the range of the past 5 years. I agree we need to watch the yuan but the PBoC has $3 trillion of FX reserves to ensure it doesn't fall too fast.
Good pickup, Jay, the labels aren't visible - the red line is 60 day correlation, the grey line is 30 day. I am using MSCI World Index in US$ terms so there's plenty of scope for the daily % changes in the 2 series to diverge but lately the relationship has tightened, even though AUD/USD had been range-bound until last week.
James, our longer term forecasts are only reviewed monthly so no change right now. In the weekly FX video we usually focus on the short term outlook. Spot iron ore has risen solidly past two days - glimmer of hope for AUD??!