AUD surges to near 3-month high on trade war optimism – November 19, 2018

November 18, 2018November 18, 2018roymorgansocial Leave a comment

The Australian dollar has reversed early session weakness to leap through technical resistance and trade above 0.7300 to the highest level since late-August. The moves came after US President Donald Trump said he is optimistic about resolving the trade war with China ahead of his meeting with Chinese President Xi Jinping at the G20 meeting this month. Whilst Trump was positive with his remarks, he also was quoted as saying “hopefully, we will make a deal, and if we don’t, we are doing very well just the way it is right now,” which suggests the onus is on China to meet Trump’s demands, or else the current tariffs will remain in place.

For now though the comments were enough to send the AUD surging higher, where it leapt from a session low of 0.7250 to touch 0.7337, before closing the week at 0.7330. It was a good week for the Aussie, building off momentum generated from the US mid-terms and local employment data released by the ABS which showed continued growth in jobs added and the unemployment rate held steady at 5.00%.

This week the economic calendar is quite thin, with the RBA monetary policy meeting minutes and US core durable goods orders the highlights. This could be the catalyst for a week of consolidation for the Aussie dollar in the absence of any major announcements. Looking at the charts, there appears to be resistance at 0.7360 and 0.7380, representing trading highs in August. If there is a break back below 0.7300, 0.7250 is the next key level of support.

The Australian dollar has also garnered support against the British pound, where on Friday it reached a 3-month high. Political woes surrounding the UK’s exit from the European Union are weighing heavily on the pound, with PM Teresa May under extreme pressure from within her own party, with many of her colleagues criticising the handling of the divorce negotiations and there are rumours that a leadership challenge could be launched at any moment.

Economically speaking the sterling probably should be trading higher than it currently is, however all of this political uncertainty is preventing any sustained move higher. Expect Brexit to dominate the headlines this week too whilst Teresa May tries to keep her party aligned and progress Brexit proceedings.

AUD/GBP closed the week at 0.5708, now up 6.5% from the October 11 low. There appears to be resistance at 0.5750 followed by 0.5775, representing trading highs in June and August respectively. Support starts at 0.5650 but given the wide trading range seen in recent time, it wouldn’t surprise if we see further moves beyond 0.5650 if the UK parliament can approve the Brexit divorce bill.

James King
Head of FX Dealing, AFEX
www.afex.com

Battered bourse ready for a recovery

November 16, 2018roymorgansocial Leave a comment

Original article by David Rogers
The Australian – Page: 29 : 16-Nov-18

The S&P/ASX 200 reached an intra-day low of 5,686.8 points on 15 November, before recovering to post a modest gain for the session. The recent sell-off means that with some exceptions, the Australian sharemarket now offers quite good value. The market’s forward price-earnings ratio is now slightly above its long-term average, while the dividend yield of five per cent is at its highest level in almost three years. Meanwhile, the benchmark index has recorded an average gain of 2.1 per cent in December over the last five years.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CREDIT SUISSE (AUSTRALIA) LIMITED

Blue-chip beating adds to rout

November 15, 2018roymorgansocial Leave a comment

Original article by David Rogers
The Australian – Page: 17 & 27 : 15-Nov-18

The Australian sharemarket has now shed more than 10 per cent since it peaked at a 10-year high in August. The 3.5 per cent decline in the last two trading sessions followed a rebound in recent weeks, after the local market fell 6.1 per cent in October. Blue-chip stocks in particular have been heavily sold down, and traders suggest that offshore selling has been a major driver of the pullback. Richard Coppleson of Bell Potter says this could potentially result in a rebound in the next week or so.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, BELL POTTER SECURITIES LIMITED, TELSTRA CORPORATION LIMITED – ASX TLS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESFARMERS LIMITED – ASX WES, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, WOODSIDE PETROLEUM LIMITED – ASX WPL, SOUTH32 LIMITED – ASX S32, CSL LIMITED – ASX CSL, FORTESCUE METALS GROUP LIMITED – ASX FMG, SANTOS LIMITED – ASX STO, COCHLEAR LIMITED – ASX COH, SEVEN WEST MEDIA LIMITED – ASX SWM, NINE ENTERTAINMENT COMPANY HOLDINGS LIMITED – ASX NEC, PACT GROUP HOLDINGS LIMITED – ASX PGH, RAMSAY HEALTH CARE LIMITED – ASX RHC, BINGO INDUSTRIES LIMITED – ASX BIN, AUSNET SERVICES LIMITED – ASX AST, COMPUTERSHARE LIMITED – ASX CPU, MEDIBANK PRIVATE LIMITED – ASX MPL, SHANGHAI COMPOSITE INDEX, HANG SENG INDEX, NIKKEI 225 INDEX, KOSPI INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, AUSTRALIAN LABOR PARTY, CREDIT SUISSE (AUSTRALIA) LIMITED

CBA, NAB chairmen to face Hayne heat

November 14, 2018roymorgansocial Leave a comment

Original article by Richard Gluyas
The Australian – Page: 23 : 14-Nov-18

Commonwealth Bank of Australia chair Catherine Livingstone will appear before the financial services royal commission on 19 November. National Australia Bank chairman Ken Henry is expected to front the inquiry in the following week. The CEOs of the four major banks will also give evidence during the final round of public hearings, along with Macquarie Group’s Nicholas Moore, AMP’s Mike Wilkins and the heads of ASIC and APRA. CBA and NAB attracted criticism in the royal commission’s interim report.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, MACQUARIE GROUP LIMITED – ASX MQG, AMP LIMITED – ASX AMP, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

CBA to turn fully green by 2030

November 14, 2018roymorgansocial Leave a comment

Original article by Mark Ludlow
The Australian Financial Review – Page: 10 : 14-Nov-18

The Commonwealth Bank of Australia aims to source 65 per cent of its electricity requirements from renewable sources by 2019, with a target date of 2030 for becoming solely reliant on renewables. As part of this strategy, CBA has secured a 12-year deal to source 96,000 megawatts annually from the Sapphire wind farm. CBA estimates that its direct emissions have been cut by 54 per cent since 2009. The bank will also become the first Australian company to join the global RE100 initiative, whose members have agreed to fully transition to renewables by 2050.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RE100, CWP RENEWABLES, PARTNERS GROUP AUSTRALIA PTY LTD, THE CLIMATE GROUP, CDP, SONY CORPORATION, PRICEWATERHOUSECOOPERS, LYFT INCORPORATED, INTERNATIONAL ENERGY AGENCY

Treasury’s housing pitch: don’t loosen lending rules

November 13, 2018roymorgansocial Leave a comment

Original article by Michael Roddan
The Australian – Page: 2 : 13-Nov-18

The Treasury has urged against any relaxation of housing lending laws in its submission to the banking royal commission’s interim report, stating that any such action would be detrimental to the long-term health of the financial system. Treasury said no benefit is to be gained by offering borrowers loans that they could not afford to repay. Treasurer Josh Frydenberg has indicated that he endorses Treasury’s submission.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, RESERVE BANK OF AUSTRALIA

APRA names panel, deadline for review

November 13, 2018roymorgansocial Leave a comment

Original article by Joyce Moullakis
The Australian – Page: 21 : 13-Nov-18

The Australian Prudential Regulation Authority has advised that deputy chairman John Lonsdale will head an advisory panel that will review its enforcement strategy. The members of the advisory panel are former judge Robert Austin, the ACCC’s Sarah Court and University of New South Wales professor Dimity Kingsford Smith. The review has been commissioned in response to criticism of APRA in the financial services royal commission’s interim report, which noted the regulator’s reluctance to prosecute banks and insurers for misconduct.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, SUPREME COURT OF NEW SOUTH WALES, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, UNIVERSITY OF NEW SOUTH WALES, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN LABOR PARTY

Banks pledge to lend but with caveats

November 12, 2018roymorgansocial Leave a comment

Original article by James Eyers
The Australian Financial Review – Page: 17 : 12-Nov-18

Australia’s major banks have urged the financial services royal commission not to over-regulate the way in which they assess corporate borrowers. The banks state that this would make it harder to increase their lending to small and medium enterprises. Their urgings have come as federal Treasurer Josh Frydenberg called upon the banks to "keep open the books", while National Australia Bank executive Anthony Healy says the bank is more willing to lend to SMEs without proper security.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA. DEPT OF THE TREASURY, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC

AUD breakout topside loses steam, wage price data now in focus – AFEX Monday Update – November 12, 2018

November 11, 2018November 12, 2018roymorgansocial Leave a comment

The Australian dollar finally enjoyed some upside in the first half of last week after many months of downward pressure. The initial breakout of the long-term downtrend that had been in play since January on the first day of the month quickly gained momentum. An overall optimistic RBA coupled with the Democrats winning majority in the House of Representatives during the US Midterms gave even more support to the AUD, enabling it to test resistance just above 0.7300, before the moves ran out of steam throughout Friday’s trading sessions.

The moves initially appeared technical, with the AUD reaching a double top near 0.7300 resistance and traders taking profits on the moves, but with the US printing strong producer price index late in the session, the AUD/USD losses extended and it closed the week at 0.7225.

Looking ahead and there are several key economic releases this week that should help drive the Australian dollar:

Australian wage price index (Wed)
Chinese fixed asset investment and industrial production (Wed)
US CPI (Wed)
Australian employment (Thu)
US retail sales (Thu)

With the US Fed likely to keep raising interest rates whilst the RBA remains on hold, the attractiveness of higher US interest rates should keep the USD supported over the longer-term. As a result, if the AUD is to find any support short-term, it needs to see domestic data outperform. The RBA is unlikely to move on interest rates until it sees inflation and wage growth lift. Therefore Wednesday’s quarterly wage prix index will be closely monitored by traders. A strong number would likely see the AUD retest last week’s highs at 0.7302, however a weak number would likely put further weight on the Aussie and potentially see a 0.71 handle once again.