Tag Archives: Currencies

Australian Dollar At The Mercy Of US, China Newsflow Once Again

By Ilya Spivak, currency strategist

Fundamental Forecast for the Australian Dollar: Neutral

Aussie Dollar Looks to Fed Rates Outlook, Risk Trends for Direction
US News-Flow in the Spotlight, Government Shutdown a Wild Card

Another relatively quiet week on the domestic data front will see the Australian Dollar continue to look toward external developments for direction cues. Global slowdown fears and the outlook for Federal Reserve monetary policy continue to dominate the spotlight, with a busy docket of US event risk set to inform both narratives.

The message from a host of Fed officials since the September policy meeting has been broadly hawkish, with current and soon-to-be voters on the FOMC committee including Chair Janet Yellen making the case for "lift-off" in 2015. Another big round of official commentary is scheduled for next week. New York Fed President Bill Dudley, Chicago Fed President Charles Evans and Vice Chair Stanley Fischer haven't weighed in on the post-meeting conversation thus far so their comments ought to be in focus.

Mr Evans may command particular attention as the most vocal dove among his colleagues. It would mean far more for him to sound off in favor of a 2015 rate hike than an established hawk like the Richmond Fed's Jeff Lacker or even the middle-of-the-road Mr Fischer. The markets will almost certainly pay attention even if the pro-tightening message fails to get Evans' endorsement. After all, a sole dissent on the dovish side of spectrum will not mean much more than a hawkish one did earlier this month, when Mr Lacker fruitlessly argued for a rate hike.

Turning to economic data, September's US Employment report will take top billing, with expectations pointing to a 200k increase in non-farm payrolls. That would mark an improvement over the 173k gain in August and help bolster the case for the start of Fed stimulus withdrawal. Taken together with upbeat Fed-speak, this stands to boost the US Dollar against its top counterparts including the Aussie.

Supportive US news-flow may also calm global slowdown fears and offer a boost to risk appetite however, which might be expected to buoy the sentiment-linked Australian unit. This scenario will probably depend on the degree of risk aversion established beyond US borders, with Chinese PMI figures especially of note considering investors' focus on tumult in the world's second-largest economy as the driver of recent jitters.

Data releases out of the East Asian powerhouse have increasingly disappointed relative to consensus forecasts since late July, opening the door for continued under-performance. If this proves to be enough to keep the markets in a defensive posture, the prospect of on-coming Fed stimulus withdrawal will probably be seen as a headwind and punish the Aussie.

A possible shutdown of the US government represents a wild card as lawmakers remain at loggerheads over budgeting beyond the third quarter. Absent an agreement, traders may become concerned that another prolonged period of downtime similar to that of 2013 will exact a stiff toll on economic growth. This seems likely to push against Fed tightening bets as well as undermine global performance bets at large, triggering a broad-based deterioration in sentiment and sending the Aussie downward alongside the spectrum of high-yielding and cycle-sensitive assets.

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The Monday Report

By Greg Peel

Indecision

Friday proved to be a volatile day on Bridge Street, albeit in a tighter range than we’ve suffered recently. The ups and downs were almost a microcosm of the week itself. Early buy orders sent the index tumbling into an upward hole before the sellers quickly moved in to slap the market back into shape.

Thus the ASX200 was up 45 points from the open and down 35 at lunchtime, before rallying back into the green at 3pm and finishing with a thud on late selling, down 29 points at the close.

Not that any of it means that much at this point. Sector moves were inconsistent, with the consumer sectors and materials positing the only rallies while energy and the banks ensured a negative index close. The important point from a technical perspective is that at 5042, we still closed above 5000.

Swoosh

The strong opening on Bridge Street was attributed to supposedly positive commentary just before kick-off from Janet Yellen. A weak finish suggested perhaps Janet Yellen really didn’t say anything new.

Which she didn’t, as far as I’m concerned. The Fed still favours a rate rise before year-end and that’s what Fedheads have been consistently saying now for months. The only point of argument is that in reaffirming this stance, Yellen went some way to easing the global growth fears that heightened when the Fed did not chose to raise at the September meeting.

At least, that’s the way they took it in the northern hemisphere. London jumped 2.5%, Germany 2.8% and France 3.1%. Wall Street, which had closed on Thursday evening before Yellen spoke, jumped from the open and was up 260 Dow points at lunchtime.

Aiding the mood was an earnings report from Dow component Nike, which trashed expectations. The “beat” came down to an unexpected 30% increase in sales to…guess where -- China. Thus within the space of two sessions we had one US multinational – Caterpillar – issuing a profit warning due to the impact of weaker Chinese demand and another going the other way on increased Chinese demand.

Are rumours of China’s death premature? The difference is that Caterpillar indirectly feeds China’s export economy – Tonka trucks for mining the raw materials imported by China’s manufacturing sector for example – while Nike feeds a Chinese domestic consumer economy obsessed with all things Western, such as overpriced sandshoes. On the basis of these two US corporate results, one might be prepared to believe Beijing’s economic policies are working.

Wall Street would also have been heartened on Friday night by another revision to the June quarter GDP result, which saw the number lifted to 3.9% from a previous 3.7%. Surely this puts more pressure on the Fed to move, and as we know, Wall Street is now pro-rate rise rather than anti, as it was for most of 2015 to date.

Friday’s rally didn’t last through the afternoon, as a rate rise is still not good news for the volatile US biotech sector. This sector remains the best performing over twelve months but is sensitive to interest rates, given valuations are based on long dated earnings potential and every little tick up in the short end rate is amplified through discounted cash flow valuation from the long end.

It’s also a momentum traders’ sector, thus once it begins to move in either direction it usually gathers pace. Thus when biotechs started to drop on Friday, the selling accelerated through the afternoon. Hence we saw the Nasdaq close down 0.9% even as the Dow closed up 0.7% or 113 points, 68 of which represent a 9% jump for Nike, and the S&P split the difference closing flat at 1931.

The US ten-year bond rate rose 5 basis points to 2.17%.

Commodities

The oils also had another up-day, which is typically positive for Wall Street, but only to the tune of US27c for each of WTI and Brent. West Texas is at US$45.43/bbl and Brent at US$48.60/bbl.

While the US dollar index only rose 0.2% to 96.26, LME traders saw a stronger for longer dollar on Fed tightening and sold all base metals bar nickel, albeit modestly. Zinc copped the worst of it with a 2.7% fall.

Iron ore fell US60c to US$58.20/t.

Gold jumped up on Yellen’s supposed dovishness at her post-meeting press conference last week, and has slipped back again since Thursday night’s lift in hawkishness. It’s down US$7.80 at US$1146.30/oz.

The Aussie is up 0.3% at US$0.7024.

Given the local futures market takes the S&P500 as the Wall Street lead and not the Dow, the SPI Overnight closed down 4 points on Saturday morning.

The Week Ahead

We’re in for a busy week ahead, as locally we head towards a long weekend and the start of summer time. And of course the big match on the weekend – Australia v. England. Apparently some other trivial domestic tournaments will be held as well.

The two big events of next week are the US non-farm payrolls report for September due on Friday, in reference to all of the above, and the beginning of Golden Week in China, which sees the country close down from Thursday through to Wednesday.

While Golden Week is not quite as disruptive as the week-long Chinese New Year holiday, it can still play havoc with China’s non-seasonally adjusted data.

Thursday is the first of the month and that means manufacturing PMI day across the globe, including the numbers from Beijing and Caixin. Both parties now post both their manufacturing and services PMIs together, whereas everyone else spreads them out.

In the lead-in to the jobs report the US will see pending home sales and personal income & spending tonight, which includes an August reading for the Fed’s preferred PCE inflation measure, and Case-Shiller house prices and the Conference Board consumer confidence index on Tuesday.

Wednesday it’s the ADP private sector jobs report and the Chicago PMI, Thursday construction spending, vehicle sales and the manufacturing PMI, and Friday factory orders and jobs.

Japan will report industrial production, retail sales and jobs data across the week, as well as the quarterly Tankan Survey.

In Australia we’ll see building approvals on Wednesday and the manufacturing PMI on Thursday, followed by retail sales on Friday.

On the local stock front we’re still working through a handful of ex-divs, while Kathmandu ((KMD)) will post its FY15 result tomorrow. AGL Energy ((AGL)) and ASX ((ASX)) will both hold AGMs tomorrow, ahead of what becomes a flood of AGMs through October.

Rudi will only appear on Sky Business once this week and it'll be on Thursday at noon.

For further global economic release dates and local company events please refer to the FNArena Calendar.

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The Overnight Report: Starving Caterpillar

By Greg Peel

The Dow closed down 78 points or 0.5% while the S&P lost 0.3% to 1932 and the Nasdaq fell 0.4%.

As I write, Janet Yellen is droning on in the background as she delivers a speech to the University of Massachusetts entitled “Inflation Dynamics and Monetary Policy”, which is proving every bit as riveting as the title suggests.

There is no Q&A session following, and while Wall Street arguably squared up last night in anticipation Yellen might say something significant regarding the first rate hike, all we have learnt is that the FOMC is still anticipating a rise this year.

So nothing new there.

Yield

Another day, another big market move on Bridge Street, and yesterday it was the turn of the upside. While we might argue that the failure of Wall Street to fall out of bed on the Chinese PMI news, and a bit of a rebound in VW-hit Europe, was enough to provide relief, realistically we simply bounced off 5000 for the fifth time.

I’m happy to call Tuesday’s actual 4998 close to be close enough to 5000.

And it appears we still have plenty of investors lined up to buy yield when the opportunity presents. The smart move is to stay out on the really crazy days when the resource sectors are going nuts and also to give the banks a wide berth because they’ve now become a trader’s plaything.

The best performing sectors in yesterday’s 1.5% rally for the ASX200 were consumer staples (2.2%), utilities (2.0%) and the telco (1.8%). The banks only managed 1.5% and the resources sectors rebounded only modestly.

No one would argue that reliable yield is very attractive in this market at present, given China fears have sunk all boats. “Reliable” at this point does not include the likes of a Woodside (fixed payout but falling earnings), a BHP (progressive dividend but on falling earnings) or even a bank (heyday over, payouts likely to be cut). “Reliable” is supermarket free cash flow, broadband usage, gas pipelines et cetera.

And as we have seen quite glaringly this year, companies offering yields that don’t look spectacular now but offer significant growth are outperforming across certain sectors.

But still we are beholden to volatility, which must yet work its way out of the system. Next Thursday the market is set to enter that uncomfortable seasonal period traders typically refer to as “October”.

Trouble In Tonka Toy Town

European stock markets took a dive again last night as the beast that is the VW scandal grew another head. Government authorities across Europe, including in the two big automaker economies of Germany and Italy, announced they will be testing all diesel vehicles, V-dubs or otherwise, for emissions irregularities.

In another development, Auto Bild magazine last night accused BMW diesel engines of producing greater than the regulated level of emissions, fuelling the fire of “Omigod, they’re all doing it”. BMW nevertheless strenuously denied the accusation and Auto Bild subsequently admitted they might actually have had it wrong.

This is a scandal that won’t go away any time soon. It will take a long time for VW to recover and a long time for Germany’s manufacturing reputation to be restored. Elon Musk will be loving it.

Speaking of things diesel, leading heavy equipment manufacturer Caterpillar last night issued a profit warning ahead of next month’s US result season, slashing its revenue forecast and announcing job cuts of up to 10,000 over the next couple of years. Like virtually every company in the resource sector and resource service sector globally, Caterpillar is being forced to restructure and refocus.

Aside from the 7% plunge in Caterpillar shares being worth around 30 Dow points alone, the profit warning served to rekindle global growth fears once more. Within the first hour, the Dow was down 260 points.

The global picture overwhelmed the domestic picture, given last night’s US data releases were not too bad. US new home sales rose 5.7% in August, beating forecasts, and while durable goods orders fell 2.0%, this was all lumpy aircraft orders and met expectations.

As an aside, the German IFO business sentiment indicator showed an unexpected rise last night. It is a pre-VW measure so has to be seen in that context, but suggested to IFO that global growth fears have not hit German sentiment as much as one might assume.

Wall Street did not linger long at the low, and steadily rallied back to regain most of the opening loss by the close. A turnaround in oil prices proved supportive, and there was a suggestion of squaring up before Yellen said anything earth-moving, but also it was a case of the Dow approaching the psychological 16,000 mark at the depths and the S&P500 simultaneously eying off 1900.

Like 5000 in Australia, these round numbers are often where buy/sell orders are placed against the trend.

In the end, Wall Street, like Bridge Street, is simply banging around without a lot of conviction as the post-correction consolidation phase continues.

Commodities

Base metal markets are also attempting to consolidate. Aluminium, copper and lead all saw small moves to the upside last night while nickel, tin and zinc all rose 1.5-2%.

Iron ore is unchanged at US$56.80/t.

West Texas crude is up US38c to US$45.07/bbl and Brent is up US52c to US$48.33/bbl.

The big mover on the night was gold, which is up US$23.80 at US$1154.10/oz, despite the US dollar index being reasonably steady at 96.10. Given the move came pretty much all in one hit, rather than throughout the night, we can conclude that the trigger was a rate cut from the Norwegian Central bank to 0.75% from 1.00%, which sent the krone to a 13-year low.

The Aussie is steady just above US$0.70 despite another nostalgic wander into the swinging sixties yesterday.

Today

The SPI Overnight is up 2 points. Last Friday on Bridge Street was a wild ride of intense intra-day volatility. Maybe today will be more “Friday”.

Japan will release CPI data today and tonight a second revision of the US June quarter GDP result will be released.

Could be interesting if it’s an increase on the last revision of 3.7%.

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The Overnight Report: Taken In Stride

By Greg Peel

The Dow closed down 50 points or 0.3% while the S&P lost 0.2% to 1938 and the Nasdaq fell 0.1%.

Teetering

Tuesday night’s sell-off in copper provided a sufficient trigger to send the jitters through the local market yesterday morning, with China fears at the forefront of sentiment. The big miners, in particular, were clobbered, and just before midday the ASX200 was down 50 points.

As to what happened next was all going to come down to Caixin’s flash estimate of its Chinese manufacturing PMI. The manufacturing sector in China has now been outgrown by the service sector, but Australian raw materials don’t feed into services. And we recall that it was Caixin’s weak August estimate that set this recent correction in train.

August’s confirmed result was 47.3, and economists were forecasting a tick up to 47.5 in September on the support of Beijing’s various stimulus measures. Thus when the number came in at 47.0, all of Asia groaned.

The big miners were clobbered once more, sending the materials sector down 3.0% for the session. Resource partner energy copped a 2.2% sell-off. But most influential in the index’s final fall of 2.1% was a 2.5% carting for the banks.

Yet again the problem for the Australian market is shown up in such volatility for a sector that should be among the less volatile of any stock market. The Big Four are just too big a chunk of ASX200 capitalisation that by default they become a proxy for the Australian economy in general via the stock market. Thus “Sell Australia” means sell the banks.

There is not otherwise a lot of direct connection between Australian banks and Chinese manufacturing. Although we can make a connection via the RBA. If China’s economic slowdown forces the RBA to cut its rate again, that’s not good news for the banks. Banks like rising interest rates and a brighter economic outlook to raise longer date yields and provide greater net interest margins on lending.

Either way, the latest plunge on the local market took the ASX200 to a close of 4998. I have been suggesting for a while now that 5000 is the solid level of support which, if breached on a closing basis, would likely signal another down-leg through the previous intraday low of this correction (4928). So strictly, we’re there.

However…the good news is we did not close on the low of the session. That was 4988, at around quarter to three. In the context of a hundred point drop, a ten point recovery right at the death seems trivial, but what it showed was that the index was trying to get back over 5000. Indeed, three more little points, or maybe five more minutes of trading, and we may have been having a different conversation.

So, does 4998 mean a breach? I suggest it is not a “meaningful” breach, and today will tell. The SPI Overnight closed up 11 points so we may just be in for a reprieve. Despite a slight drop on Wall Street, most northern markets were stronger last night and seemingly less concerned over this latest weak Chinese data point.

Herby Rides Again

The Volkswagen scandal that rocked the car industry and the German and EU economies these past couple of days subsided somewhat last night on news the CEO of VW had fallen on his sword, taking the rap for the emissions fraud he insists he had no knowledge of. VW shares bounced 5% after having lost around a third of their value.

All German carmaker stocks bounced, as fear subsided that perhaps they’re all in on the game. Surely the likes of Merc and BMW can’t also be so mendacious? The relief rally filtered through to the European indices in general, and ECB president Mario Draghi also provided some confidence.

In light of heightened China fears and the subsequent decision by the Fed not to raise rates, Draghi told members of the European parliament last night the ECB stood ready to pump in more QE if deemed necessary, although not at this stage. Ultimately the German and French markets posted small gains, while London rebounded a full 1.6%.

Clearly Europe was not focused on, or at least as worried as Asian markets were yesterday about the weak Chinese PMI. Indeed, a flash estimate of the eurozone’s manufacturing PMI released last night also showed a weaker number, albeit the drop to 53.9 from 54.3 still keeps the sector in comfortable expansion territory.

Oil-Based

Similarly, a flash estimate of a US manufacturing PMI showed an unchanged 53.0. And similarly, Wall Street did not seem too perturbed about the China number, with the indices opening only a little bit lower and doing not much early in the session. It was Yom Kippur, and volumes were thin.

It wasn’t long before the Dow was down over 100 point nonetheless, but this was all to do with another 3.6% drop for WTI crude. Oil fell on the Chinese PMI, so in theory Wall Street did too, indirectly, but the afternoon saw a gradual rebound to a less intimidating close.

Wall Street has nevertheless done nothing but fall since the Fed made its non-decision last week. While it is easy to point to China, and the Fed’s highlighting of the China problem, the bulk of traders speaking on US business television suggest it is not China, but disappointment with the Fed that is reflected in the weakness.

The Fed’s October meeting looms large. Has the US central bank (a) been surprised by the quite visceral backlash to their indecision, and (b) surprised Wall Street did not rally on the news? Would a tweet from the likes of superstar bond trader Bill Gross suggesting “Get off zero now!” be enough to unsettle the FOMC? Or could the members point to yesterday’s Chinese PMI and say “See!”?

That meeting is not due till the end of October, so it’s just as well October’s not a scary month.

And just to top things off, the US government may once again shut down on October first, not due to budget wrangling, but due to deadlock over an abortion bill. How does one resolve such an issue?

Commodities

Base metal traders all but pre-empted the Chinese PMI on Tuesday night and in so doing, cleared out the stop losses and shook out the commodity funds. Thus while copper did fall again last night, it was only by 0.3%. Mario Draghi’s comments would have helped, and they also pushed up the euro and thus sent the US dollar index down 0.1% to 96.21.

Aluminium also dropped a little, but the other metals all rallied up to 1.5%.

Oil prices definitely fell on China fears, but given recent volatility, any little trigger will do. West Texas is down US$1.67 to US$44.69/bbl for the new November delivery front month and Brent, already November, is down US$1.18 to US$47.81//bbl. The recent range remains well and truly intact.

Iron ore fell US30c to US$56.80/t and has also been going nowhere fast of late.

Gold took the lower dollar and ECB QE talk as reason to rise US$5.60 to US$1130.30/oz.

The Australian stock market was not the only victim of China yesterday. The Aussie is down 1.2% to just over US$0.70.

Today

As noted, the SPI Overnight closed up 11 points, which would take us just a little back above 5000 in the index if accurate.

Japan is back on board today after a three day break, so it will be interesting to see how the Nikkei responds to the past three days’ global activity. Japan will also see a flash PMI of its own today.

Germany’s IFO business sentiment survey for September is out tonight, but I assume the survey was conducted before the VW scandal exploded.

Wall Street will see durable goods and new home sales.

Locally, Brickworks ((BKW)) will release its FY15 result today.

Rudi will make his weekly appearance on Sky Business, at noon (Lunch Money) and re-appear between 7-8pm on Switzer TV.

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The Overnight Report: Of Cars And Copper

By Greg Peel

The Dow closed down 179 points or 1.1% while the S&P lost 1.2% to 1942 and the Nasdaq fell 1.5%.

Hesitant

The ASX200 shot up 59 points out of the blocks yesterday in another bout of what has now become familiar whiplash volatility. It looked like we might be in for another one of our total reversal sessions following the drubbing on Monday, but this time it wasn’t to be so.

The index faded and faded as the day wore on, suggesting the opening rally was more about sellers backing off than buyers arriving in force. Just after 3pm, the index was up a mere 6 points. Then it looks like someone put in a sizeable late sell order, given a close of up 37 seemed to run counter to the mood over most of the day.

That buyer might be feeling a little sheepish this morning.

The ultimate close was a bit of a mixed bag on a sector basis. Yet another pop for the oil prices sent energy up 2.7%, while an unchanged iron ore price was enough to see a 0.3% fall in materials – the only sector to finish in the red. With utilities, the telco and consumer staples also closing up around 1.5% we might suggest yield was the story yesterday, albeit the banks only managed 0.6%.

Recent extreme volatility in bank share prices may well have scared off more conservative investors.

It will all be a different story today nonetheless, with northern markets copping a thumping overnight. I have been suggesting these past few days that weakness on Wall Street post-Fed has been more to do with the derivative expiry and Fed disappointment than it is to do with renewed China fears, given there’s nothing much new about China fears. Well, it looks like commodity traders have had a think about it, thanks to Janet Yellen’s highlighting of the issue, and decided to get out.

Commodities

The benchmark commodity for global economic growth is copper, and last night it fell 3.4% on the LME, having been down as much as 4.5% at the afternoon “close”. At just over US$5000/t copper is near its six-year low, but has not yet fallen back to its August low.

Commentators were scratching their heads as to why commodity prices suddenly decided to give way last night, but realistically we’d have to assume a bit of building angst since the Fed made the historical decision of allowing the rest of the world to dictate US monetary policy. Stop loss breaches and commodity fund selling did the rest (commodity funds much constantly buy and sell to maintain basket weights and in so doing feed volatility somewhat self-destructively).

The likely trigger was a report out from the Asian Development Bank which featured a downgrade to the bank’s 2015 China growth forecast to 6.8% from 7.4%. My only comment here is where on earth did 7.4% come from? Even Beijing’s target is 7.0%. And the rest of the world’s economists had already pencilled in numbers around 6.8% in January.

But that’s markets for you.

Beyond copper, the other base metals all fell around 1.5%.

Iron ore was again unchanged at US$57.10/t, but that hasn’t stopped BHP Billiton ((BHP)) being thumped 5% overnight, Rio Tinto ((RIO)) 3.5%, and London-based Glencore 10%.

West Texas crude is down, but only by US65c to US$45.83/bbl. And Brent is up US27c at US$48.99/bbl.

Commodity price falls have helped the Aussie down 0.6% to US$0.7089, and the Aussie, and commodities, were also under pressure from a 0.4% gain in the US dollar index to 96.32.

Gold is thus down US$8.70 at US$1124.70/oz, and silver fell 3%.

That was all about weakness in the euro, and that is all about cars.

Bugs in the system

What started as an embarrassment has now led to a major mea culpa as the number of vehicles Volkswagen will have to recall due to emissions fraud has risen to 11 million globally.

VW shares fell 15% in Germany last night and traders began to wonder whether the leading carmaker (briefly the biggest company in the world after the fall of Lehman) is alone in its software manipulation. When you think VW, Mercedes Benz, BMW, Audi and Porsche, you realise that auto-making is a significant contributor to Germany’s GDP.

The DAX thus fell 3.8% last night, dragging the rest of Europe and the UK down with it. Auto-makers were a target globally, including Ford, which fell 2.8%.

Thus on a combination of copper and cars, Wall Street was trashed on the open. The Dow was down close to 300 points by lunchtime.

However volume was light, which is in sharp contrast to near-record volumes recorded last Friday, expiry day, when last Wall Street tanked. It was more a case of no buyers than many sellers. Hence the indices did manage to recover some ground in the afternoon.

Bonds nevertheless became a safe haven once more, with the US ten-year yield falling 9 basis points to 2.12%.

It should also be acknowledged that the European car crisis, if we want to call it that, has come on top of ever-building migrant crisis. Last night EU countries agreed to resettle 120,000 Syrian refugees between them, to take the pressure off the landing destinations of Italy and Greece. It is a humanitarian crisis, but it also represents a heavy cost burden for EU countries struggling to reignite growth.

Today

The SPI Overnight closed down 66 points or 1.3%.

If accurate, we’ll be heading toward 5000 again, but we’d need another drop of over 100 points in the ASX200 to breach that level today. It is likely all going to depend on today’s release of Caixin’s flash estimate of its China manufacturing PMI for September, due around midday.

Caixin’s final August result was 47.1, and the forecast for September is 47.6. If this is accurate, then we may see some market relief, although sub-50 still means contraction. But improvement would go some way to suggesting Beijing’s desperate stimulus attempts might just be showing signs of effect.

Realistically, for earlier interest rate cuts and currency devaluations, it’s very early days for a flow-through impact.

Japanese markets will again be closed today, which is probably a blessing for the world’s other major auto-maker.

Locally, Nufarm ((NUF)) will release its FY15 result.

Rudi will appear on Sky Business twice today. First as guest between 5.30-6pm (Market Moves) then later as host on Your Money, Your Call Equities (8-9.30pm).

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The Overnight Report: Not What You Think

By Greg Peel

The Dow closed up 125 points or 0.8% while the S&P gained 0.5% to 1966 and the Nasdaq closed flat.

Jumping at Shadows

There was nothing particularly remarkable about yesterday’s significant sell-off on Bridge Street. The market remains very jittery, and technical analysts continue to suggest the index needs to drop to a new low before the bull market can re-establish, both locally and on Wall Street.

The likely trigger for the panic, which saw the big name sectors of banks, energy and materials hardest hit but selling otherwise market-wide, was an assumption by investors the Fed’s decision not to raise suggests the global economy is in a more parlous state than already assumed, and specifically the Chinese economy. A near 300 point fall in the Dow on Friday night confirms this assumption.

Except that it doesn’t. There is no reason to believe the Fed knows anything more about the state of the Chinese economy than the market does. A global correction in stock indices of around 15% is already an adjustment to the China reality. Under pressure from the likes of the IMF, the Fed is vacillating, and moreover by being worried about market uncertainty, is simply fuelling that uncertainty with its timid indecision.

There are two main reasons Wall Street dropped sharply on Friday night, and China is not one of them. Last night’s rebound confirms to a great extent that Friday’s trade was about disappointment in the Fed and, more influentially, about volatility independently driven by the quadruple witching derivatives expiry.

The good news is that the ASX200 hit a low yesterday at 2pm of down 143 points before recovering 39 points to the close. This still left us with a 2% drop, but a secondary phase of a correction is more likely to begin with a panicked close on the lows of the day. The other good news, technically, is that the ASX200 once again approached the 5000 support level, got as far as 5027, and then retreated once more. We did not see a lower low.

Such volatility is consistent with any market correction. Markets never V-bounce out of major pullbacks, and W-bounces aren’t clear cut either. What tends to happen looks more like WW, representing a volatile period of consolidation. That’s not to say we can’t yet see a lower low, and a close below 5000 would no doubt ensure one. But few disagree a lower low would still provide a bottom of the correction, and not the beginning of a bear market.

Or we may not see a lower low. If 5000 continues to hold, eventually this market is going to come to believe we must have already seen the bottom.

Of course, Wall Street will have a lot to do with it. As will ongoing Chinese data releases (such as this week’s Caixin flash manufacturing PMI release).

Disappointment

Wall Street market commentators appear to have a consensus view in the wake of the Fed’s decision of “we didn’t think they would but we were really hoping they would”.

Last night the Dow opened with a near 200-point rally to late morning, most likely representing Friday’s expiry factor. It didn’t help that last night’s August existing home sales number showed a greater than expected fall of 4.8%, but economists were none too concerned – July marked a post-GFC high in existing home sales.

It was at that point however, that Hillary Clinton entered the game.

A US drug manufacturer had been accused of price gouging on a particular drug. Presidential candidate Clinton tweeted that she intends to attack price gouging in the drug industry and will tonight outline her plans. In response, US biotech stocks were crunched. These high momentum plays are very susceptible to volatility.

So down everything came, until lunchtime. It was then Fed president and FOMC voting member Dennis Lockhart suggested he remained very confident that there will indeed be a Fed rate hike this year. On that note, the Dow rallied back to be up 150 points, before fading slightly at the close.

Can you believe it? A Fedhead calls a rate hike and Wall Street rallies. So diametrically opposite to what would have happened in the first half of this year.

And evidence Wall Street is not as worried about the Chinese economy as Friday night’s drop might suggest.

Biotech stocks nevertheless did not join in the rebound. Hence while the Dow closed up 0.8%, the Nasdaq closed flat on the session. The S&P split the difference with a 0.5% gain.

Commodities

Underpinning last night’s rally in US stock indices was a rally in oil prices. However, one would have to think these monotonous inter-day swings of 3,4,5% are becoming so regular as to become meaningless. Friday’s weekly US rig count showed a drop, so oil prices jumped last night.

West Texas is up US$1.56 or 3.5% at US$46.48/bbl and Brent is up US98c or 2% to US$48.72/bbl. The West Texas October delivery contract is set to expire, so that would also feed the volatility.

Base metal prices were evenly up and down by not too significant amounts last night on the LME, suggesting nothing in particular.

Iron ore was unchanged at US$57.10/t.

The US dollar index is up another 0.8% to 95.92, spurred on by Lockhart’s comments. Thus gold is down US$6.50 to US$1133.40/oz.

And the short-covering rebound in the Aussie appears now to have lost steam. The Aussie is down 0.8% to US$0.7129.

Today

The SPI Overnight closed up 28 points or 0.6%.

A June quarter house price index will be released locally today, and Japan will again be closed.

TPG Telecom ((TPM)) will release its FY15 result today.

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More Aussie Downside

By Ilya Spivak, currency strategist, FXCM

The Australian Dollar advanced for a second consecutive week after finding support just below the 0.69 figure against its US counterpart. A recovery in risk appetite looks to have been the driving catalyst behind the advance, with prices tracking higher alongside the MSCI World Stock Index, a proxy for global sentiment trends. A quiet economic calendar on the domestic front is likely to see external factors remain at the forefront in the week ahead.

Price action in the aftermath of last week's FOMC monetary policy announcement suggested the central bank's reticence to begin stimulus withdrawal unnerved investors. The statement accompanying the rate decision warned that "recent global economic and financial developments may restrain economic activity," alluding to market-wide tumult that broke out in mid-August. The threat of slower US growth against a backdrop of lingering weakness in the Eurozone and China undermined the outlook for global performance at large, weighing on sentiment.

This narrative is likely to carry forward in the week ahead, with markets monitoring a steady stream of activity data from the world's major output nodes for direction cues. An ample helping of US indicators including home sales, durable goods orders and flash PMI figures will inform on the state of the world's largest economy. September's preliminary PMIs are also due from the Eurozone and China.

On balance, global economic news-flow has increasingly disappointed relative to consensus forecasts since late August out of the G10 and emerging-market economies alike. This suggests analysts' models of global output trends have tended to be more optimistic than reality has warranted, opening the door for additional downside surprises ahead. Soft outcomes offering additional fodder for worldwide slowdown fears is likely to keep risk appetite under pressure, weighing on the Aussie.

Reprinted with permission of the publisher. The above story can be read here on the website www.dailyfx.com.

The views expressed are not by association FNArena's (see our disclaimer).

For real time news and analysis, please visit http://www.dailyfx.com/real_time_news

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The Monday Report

By Greg Peel

Uncertainty

It was a wild old ride on Bridge Street on Friday – not very “Friday” at all. The ASX200 was down 50 from the open and then up 50 mid-session, before fading to close up 23. The only sector to finish in the red was energy, with a distinct 1.6% fall.

The volatility mimicked a similar response on Thursday on Wall Street to the Fed’s rate decision, or more accurately lack thereof. Wall Street ultimately closed lower on Thursday night but not with any great conviction, reflecting indecision about whether the Fed’s message was a good one (lower rates for longer supporting asset prices) or a bad one (US economy not strong enough, global growth concerns).

The ASX200 thus also opened lower, helped by weaker oil prices, but it seems the buyers thought “why do we need to go lower?” If it’s all about a slowing China well we’ve already adjusted for that issue. That’s why we’re holding above 5000 and not testing 6000 as we were earlier in the year. And the Aussie has come right back towards a more “fair value” level, offering long-awaited support for the Australian economy.

Which is exactly the way Glenn Stevens saw it as he testified before a parliamentary committee on Friday, which the RBA governor is obliged to do every six months (not quarterly, as I erroneously suggested last week). If Janet Yellen was playing up the China fear in her press conference, Glenn Stevens was playing it down. And between the US and Australia, it is Australia more directly linked to China’s economic performance.

The Australian economy is doing okay, Stevens implied, and we will eventually see the benefits of the weaker currency flowing through.

Frustration

The smart money had stood aside on Thursday night on Wall Street as the headless chooks ran around, and returned on Friday night to decide the response was to sell. While the reasons why it was a sell call are debatable, I think we can now finally put to bed the notion of “bad news is good news” for Wall Street. If that thematic were still the rule, the Dow would have been up 300 points on Friday night.

As it was, the Dow closed down 290 points or 1.7%. The S&P lost 1.6% to 1958 and the Nasdaq fell 1.4%.

The falls followed a lead-in from Europe of a 3% fall in Germany, 2.5% in France and 1.5% in the UK, which followed a 2% fall in Japan. Clearly the world was not enamoured with the Fed’s decision.

Why?

Is it because no rate rise implies the US economy is not strong enough? No. Apparently the FOMC’s decision was a very close run thing and thus the deciding factor was concerns over global growth, meaning China and emerging markets, and market volatility, which in theory is meant to be no concern of the Fed’s. So were markets down because if the Fed is worried about China, perhaps the world should be more worried about China than it previously has been?

There is certainly an argument here, and that’s the way commodity markets saw it on Friday night as well. But there’s also the argument that the volatility the Fed is worried about is just as much to do with Fed uncertainty as it is to do with China. In other words, the Fed has said “we won’t raise while the markets are volatile” yet by not raising it has assured that markets will remain volatile on ongoing uncertainty. Investors are frustrated, and have decided to sell rather than go through another tiresome round of “will they/won’t they?”

From Wall Street’s perspective, Friday night’s move was also clouded by the fact it was quadruple witching derivatives expiry, which can move markets substantially independent of any fundamental influences. Friday saw one of the heaviest volume days for the year on the NYSE, and that’s all about expiries. Thus if the selling was all about quadruple witching, we’ll have to wait to tonight to see what Wall Street really thinks.

The US ten-year yield lost another 9 basis points on Friday to 2.13%, so we’re back below the starting point of selling ahead of what the US bond market clearly assumed would be a rate rise. But there is also another influence on US bonds we should consider.

Someone out there holds more US bonds than anyone else, and is currently spending a lot of money propping up its economy and share market and thus needs some funds. Weakness in US yields has been attributed to the added element of Chinese sales.

Spooked by the 300 point Dow fall, the local SPI futures closed down 76 points on Saturday morning. That would take us back down to 5100, which is still 100 points above what has so far proven impenetrable support at 5000. If Friday was a buy, then today is a buy on the opening drop, assuming nobody’s changed their minds over the weekend.

And a weekend is a long time in markets.

The good news is that the weekend brought Alex Tsipras and his Syriza party re-election in Greece, with only a handful of seats lost. This suggests a vote to suffer the strict austerity regime placed upon Greece by its creditors, even though Syriza was first elected on exactly the opposite ticket.

The main opposition was pro-austerity anyway, so that wasn’t an issue. But with the majority of Greek voters now resigned to their lot, presumably the rumblings of discontent will subside and the word “Grexit” will be consigned to the shelf.

The IMF-EU-ECB will also be heartened that Greece’s ultimate submission has sent a message to any other eurozone anti-austerity groups that “you can’t fight the troika”.

Commodities

Oil was the main focus on Friday night, as West Texas once again plunged 4% or US$1.99 to US$44.92/bbl and Brent fell 3% or US$1.50 to US$47.74/bbl. The falls carried on from the immediate post-Fed response on Thursday night.

But WTI finished the week exactly where it had started. It was bid up all week on an expected Fed rate rise, and sold off when that didn’t happen. Had the Fed raised, it would have removed uncertainty and settled markets but also sent a message that global growth is not a worry. The opposite was true. So oil prices fell back, as did base metal prices.

LME prices had been largely stronger ahead of the Fed meeting, and on Friday night copper and zinc fell 3%, lead and nickel 2%, tin 1.5% and aluminium 0.5%.

The US dollar actually recovered on Friday night all it lost on Thursday night post the Fed’s non-decision. The dollar index rose 0.8% to 95.15. This would not have helped commodity prices.

Iron ore ticked up US30c to US$57.10/t.

And gold rose again, by US$7.70 to US$1139.90/oz. Call that a delayed response to no rate rise.

The Aussie is up 0.2% at US$0.7187, despite the US dollar gain. One wonders how long the short-covering support will last.

As noted, the SPI Overnight closed down 76 points or 1.5%.

The Week Ahead

It won’t just be the week ahead, but the quarter ahead, in which we’ll be debating whether the Fed might raise.

Shoot me now.

Is the Fed still “data-dependent”? And if so, whose data? America’s or China’s? On Wednesday we’ll see Caixin’s flash estimate of Chinese manufacturing PMI for September, and if you recall, it was Caixin’s August estimate that sent the proverbial hurtling into the fan a month ago.

Flashes will also come from the eurozone and US, with Japan a day later. Japan is closed until Thursday.

The US will also see existing home sales tonight, FHFA house prices and the Richmond Fed index tomorrow, new home sales, durable goods and the Chicago Fed national activity index on Thursday, and a flash services PMI estimate, fortnightly consumer confidence and another revision of June quarter GDP on Friday.

A quiet week economically for Australia sees a June quarter house price index tomorrow as the only highlight.

On the local stock front, TPG Telecom ((TPM)) will release its FY15 result tomorrow, Nufarm ((NUF)) on Wednesday and Brickworks ((BKW)) on Thursday.

The ex-div season starts to wind down with only a handful this week, but from now the AGM season starts to ramp up, with Suncorp ((SUN)) among the early birds this week. Telstra ((TLS)) will also begin a series of shareholder meetings across the country today.

Rudi will appear on Sky Business on Wednesday at 5.30pm and on Thursday at noon and again between 7-8pm for the Switzer Report. On Wednesday night, 8-9.30pm, Rudi will host Your Money, Your Call Equities on the same channel.

For further global economic release dates and local company events please refer to the FNArena Calendar.

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The Overnight Report: Taking The Easy Road

By Greg Peel

The Dow closed down 65 points or 0.4% while the S&P lost 0.3% to 1990 and the Nasdaq rose 0.1%.

Expiry

There’s little to say about yesterday on Bridge Street given what has since transpired. Basically we saw the rally kick on thanks to a big rebound in oil prices and some support from base metal prices to ensure energy and materials led the charge from the opening bell.

From that point the magnetic force of index expiry day sucked the ASX200 towards the 5200 level in a big hurry, which has proven to be the top of the post-correction range of late. But given anything could have happened last night in the US and probably would, selling returned in the afternoon to square up positions.

It was still a positive finish by any measure and while it will be interesting to see which way we go today, the good news is the September expiry is now out of the way which means removing a good deal of potential intraday volatility from the equation.

No Go

Wall Street has to wait for tonight for its own expiry, and inherent volatility in the lead-in was evident in last night’s response to the Fed statement.

The Fed did not raise its funds rate. At 2pm, when the statement was released, the Dow was up 69. At 2.04, it was down 52. At 2.12, it was up 67. At 2.30, it was up 4. At 2.48 it was up 181 and half an hour later it was down 44. At 3.30 it was up 22 and at 4pm it closed down 65.

While the approaching expiry would have exacerbated volatility, the bottom line is the Fed managed to create its own volatility. I mentioned yesterday that half the market thought the Fed would raise and half didn’t, and that the market was split on whether stocks would plunge or rally on a yes, or plunge or rally on a no. Well, between 2pm and 4pm Wall Street pretty much did all of the above.

We can’t conclude by the Dow closing down on the session that Wall Street would have rallied on a rate hike, given two strong lead-in sessions and thus likely profit-taking last night. Tonight will be the better indicator, given the smart money typically stands aside from the volatile last two hours post Fed statement. But it’s also quadruple witching.

The Fed has two mandates of control: employment and inflation. The Fed’s two targets in that respect are 5.0-5.2% and 2%. August unemployment came in at 5.1%. Tick box A. Inflation, measured by core CPI, is 1.8%. Do not tick box B. Headline inflation which includes the influence of oil prices, is 0.2%. Go nowhere near box B.

One could say there’s the simple reason why the Fed didn’t raise, but only if it were that straightforward. Aside from suggesting in its statement that the FOMC would like to see higher inflation, the Fed also cited global uncertainty as a reason to remain cautious. Janet Yellen qualified “global uncertainty” at her press conference as meaning China and emerging markets. Three major global institutions – the IMF, World Bank and Bank for International Settlements – had pleaded with Yellen not to raise. Seems she listened.

“Global uncertainty” has unleashed a raging argument amongst Wall Street commentators. On one side, the angry mob is accusing the Fed of playing the role of global central bank when its mandates are simply US-centric. On the other, cooler heads note Yellen’s concern, as qualified in her press conference, is that global uncertainty has weighed on global inflation (in simple terms, weak China, falling commodity prices) and thus US inflation expectations.

The statement showed the net forecasts of all FOMC members for US inflation being lowered from the June meeting, and subsequently projections for the Fed funds rate. In June, four members voted to raise there and then, and last night, only two voted for a raise. It was stated that the majority of the FOMC still want, and expect, to raise in 2015. But it will depend on how global uncertainty plays out, and what the data say in between.

Ms Yellen, if I may have a word. Two major factors have driven global uncertainty all year. One is China. The other is not knowing what the Fed is going to do. And now we still don’t know. The next Fed meeting is in October – too soon. The following is in December, and we recall that in 2013, the Fed chose December to announce the taper.

To my mind it seems the longer the Fed waits to see how “global uncertainty” will play out, the longer the globe will remain uncertain. Thus strike out 2015. Strike out eternity.

Beyond US Stocks

So what were financial markets really expecting the Fed to do? The movements in the Dow, as noted above, underscore the fact the US stock market had no idea.

The US dollar index plunged 0.9% to 94.44. Rate rise expected. The US two-year bond yield has been rising sharply this week, and it fell 11 basis points to 0.70%. Rate rise expected. The ten-year yield fell 9bps to 2.22%. Ditto.

Gold responded to the US dollar plunge in rising US$12.60 to US$1132.20/oz.

The LME closed just as the Fed statement was being released, thus we have to wait until tonight to gauge the response in base metal prices. Nickel and tin dropped over a percent last night but everything else was little changed.

Iron ore pays no heed to such trivialities. It rose US80c to US$56.80/t.

Oil prices jumped about 5% on Wednesday night, so last night’s drop in the US dollar did not affect further gains. Instead, West Texas slipped back US22c to US$46.91//bbl and Brent fell US64c to US$49.24/bbl.

Where to now?

The SPI Overnight about sums it up. The most momentous rate decision in history, and the SPI closed down one whole point, on the new December contract. You can just see “Now what?” written all over futures traders’ faces.

Speaking of December, we now have three long, tedious months of more tiresome will they/won’t they unhelpful Fed rate discussion. If history plays out to typical trends, we’ll bungle our way through the rest of dangerous September and through scary October before November sees some hope returning and Santa starts putting in his buy orders.

By December we’ll have more US jobs and inflation data to consider. Perhaps we will also see the impact of the Chinese currency devaluation starting to flow through, and maybe Beijing will have implemented further stimulus measures. Maybe, as was the case in 2013, the Fed will see a safer environment in which to make its move.

Maybe the Fed was right not to raise just yet. But what we do know is the volatility commentators have been warning about all year that the first Fed rate rise will bring has now been dismissed as a concern. Were at rate rise to cause a Wall Street collapse, as many had warned (even after the recent correction), then by default no rate rise should have meant a big Wall Street rally. It didn’t.

I noted yesterday that in a CNBC survey of US economists, a total of 0% cited interest rates as the greatest threat to the US economy. The Fed had its chance to exploit such disinterest. History shows that central banks are always behind the curve.

Today

It is also interesting that of the same sample set of economists, 0% cited Europe as the biggest threat to the US economy. The Greeks – remember them? – go to the polls again on the weekend.

It’s quadruple witching on Wall Street tonight.

Glenn Stevens will testify before a parliamentary committee today, as he is scheduled to do each quarter.

The changes announced two weeks ago to the constituents of the S&P/ASX stock indices will become effective today.

Premier Investments ((PMV)) will release its FY15 result.

It’s Friday.

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The Overnight Report: Here We Go

By Greg Peel

The Dow closed up 140 points or 0.8% while the S&P gained 0.9% to 1995 and the Nasdaq added 0.6%.

Trigger Happy

Well, everything that was a screaming sell on Tuesday was a screaming buy yesterday on Bridge Street, for reasons only the maniacal herd could probably explain. It was almost a mirror image reversal, not just in ASX200 points but in sector moves as well. What had changed?

Not much. Commodity prices were weak on Monday night and rebounded a little on Tuesday night except for iron ore, which fell sharply again. But the materials sector was up 1.5% yesterday. Oil recovered a little and yet energy jumped 2.6%. And commodities don’t have a lot to do with why the banks rallied 1.9% or the telco 1.8%, having done the opposite on Tuesday.

The only difference was that Wall Street was down on Monday night and up on Tuesday night. It was up again last night and what is really going on is not to do with sentiment driven by some distinct macro influence, but merely positioning, squaring up or just moving to the sidelines ahead of not only the Fed meeting tonight, but the quadruple witching September derivative expiry on Friday night.

On that last point, it should be noted that September SPI futures and options and ASX index options expire today, in a bit of local witching. This can go a long way to explaining the past two days of seemingly mindless movement. We are very near the critical 5000 mark where there are no doubt a lot of options positions struck. The market-makers who sold those options have to madly hedge as expiry approaches, selling into falls and buying into rallies.

Such action becomes increasingly self-perpetuating, and loss-making, as options hedging itself moves markets and by doing so ensures the need for more hedging, thus exacerbating volatility. The official term is that market-makers are “short gamma”. Market parlance calls it “Bad Greek”.

It should also be noted that Tuesday’s plunge took the ASX200 down to 5018 – close to the now well established support level of 5000. Each time the index has bounced off near-5000 levels, it has done so with air of “this is it!” in terms of calling the market bottom.

Amidst a down 80/up 80 couple of sessions we can still derive no implied response to a new prime minister, except perhaps in media stocks, but it’s fair to say the global macro far outweighs any domestic fiscal considerations at this time. All things being equal, we probably would have seen a positive stock market response on Tuesday, but things are far from equal at the moment.

There’s this one little factor called the Fed.

Coin Toss

Okay let’s get this out of the way. My tip: They raise, by 25 basis points to a 25-50bps range, Yellen’s press conference rhetoric is nevertheless dovish, emphasising a very gradual approach to normalising, and Wall Street rallies.

My only caveat is that having already rallied strongly for two days, we might see some “sell the fact” into an initially positive reaction.

But there are plenty on Wall Street who think that if they raise, Wall Street tanks. And there are plenty who emphatically believe they won’t raise.

CNBC surveyed US economists last night and the situation is beautifully summed up by two particular responses. On they will/they won’t, economists are as good as 50-50. When asked what is the greatest threat to the US economy at present, the percentage of those surveyed who believe it’s US interest rates came in at a grand total of – wait for it – zero. The greatest threat is global weakness, according to the largest percentage at 45%.

That will do for now. By this time tomorrow, we’ll know.

For those stuck in a year-long mindset, last night’s rally on Wall Street can be put down to a weak US August CPI reading, implying no rate rise. It’s rubbish.

The headline CPI fell 0.1% to an annual 0.2%, as expected, which is all down to oil prices. The core CPI, ex food & energy, remained at a steady 1.8% annual. The Fed is targeting 2%. And the Fed doesn’t really pay much attention to CPI as an underlying inflation measure.

If the market thought the CPI data would ensure no rate hike, then the US ten-year yield would not have jumped another 10 basis points to 2.28%.

Aside from the squaring up and positioning ahead of tonight following a solid market correction, and ahead of Friday’s expiry, Wall Street rallied again last night because oil rallied – at one point by 6%.

Commodities

It is interesting to note that the high mark for oil in 2008, at around US$157/bbl, was marked shortly after Goldman Sachs called 200 dollar oil. When earlier this week Goldman called 20 dollar oil, many a veteran Nymex trader smiled and thought “we’ve now seen the bottom”.

The oil market is short, so any little thing will trigger a short-covering, snap-back rally, as we have seen several times these past weeks. Last night it was lower than expected US weekly crude inventories, and news that after all this time, the US will have “boots on the ground” in Syria, albeit only in an “assist and advise” role.

Syria does not produce oil but is inexorably part of the whole Middle East geopolitical equation, although on any other day such news would not have sparked a 6% price jump. You need current volatility for that. Prices eased back for their highs so over 24 hours, West Texas is up US$1.98 or 4.4% to US$47.13/bbl and Brent is up US$2.13 of 4.5% to US$49.88/bbl.

It must be noted that Brent last night rolled into the November delivery front-month, so for the next week the WTI-Brent spread is impacted by a timing difference.

It was a very quiet session on the LME last night as traders squared up ahead of the Fed meeting. Copper rose 1% and lead 2%, with the others all making sub-1% moves.

Iron ore fell US40c to US$56.00/t.

Perhaps there were a few investors out there who decided whatever tonight brings, it might be safer just to shift into gold. Gold jumped US$14.90 to US$1119.60/oz last night, despite the US dollar index falling only 0.3% to 95.32.

The world is also short Aussie, so aside from Tuesday’s Malcolm rally another 0.8% gain over the past 24 hours to US$0.7195 is also likely pre-Fed square-up.

Today

The SPI Overnight closed up 35 points or 0.7%.

You know what’s happening tonight. If you’re really keen, 4am Sydney time.

Before we get there, New Zealand will release its June quarter GDP today (if only the Kiwis were as slow on Eden Park) and an RBA Bulletin will be released.

OrotonGroup ((ORL)) will release FY15 earnings today.

Futures and index options expire today.

Rudi will make his weekly appearance on Sky Business' Lunch Money, noon-12.45pm.

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Tag Archives: Currencies

Australian Dollar At The Mercy Of US, China Newsflow Once Again

The Monday Report

The Overnight Report: Starving Caterpillar

The Overnight Report: Taken In Stride

The Overnight Report: Of Cars And Copper

The Overnight Report: Not What You Think

More Aussie Downside

The Monday Report

The Overnight Report: Taking The Easy Road

The Overnight Report: Here We Go