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Global uncertainty weighs on the AUD

Published November 20, 2018

Author: Dennis Li

As investors continued to digest the conflicting signals from the US on the prospect for a breakthrough in the US-China trade dispute, we saw the AUD lose ground from yesterday’s highs and now trading back marginally under 0.7300. In the absence of any major market moving economic release, the markets are anticipating the RBA November meeting minutes to be released at 11:30 Sydney time this morning and a scheduled speech by Governor Philip Lowe. Mounting speculation that the US Fed may not raise rates in December hasn’t hurt the USD too much just yet with a flight to safety dominating the markets hence the rally in the gold price.

Uncertainty, volatility and lack of confidence are the dominating themes in the markets at the moment and none of them are going to help the AUD or equities markets.

  • The Nasdaq lost 3.26% of its value on Monday as a 3.8% drop in Apple shares following the Wall Street Journal reported the company had cut production orders in recent weeks for all three iPhone models launched in September.
  • British Prime Minister Theresa May vowed on Monday to stick to her drafted Brexit deal as lawmakers in her own party tried to trigger a leadership challenge; while the EU Brexit negotiator Michel Barnier commented the draft deal reached was ‘fair and balanced’.
  • According to Italy’s Economy Minister Giovanni Tria on Monday, Italy will stick with its 2019 budget plan despite criticism from the European Commission while talks are continuing.
  • According to China’s ambassador to the WTO, China plans to propose reforms of the World Trade Organisation while warning fellow WTO members against seeing reform as a chance to put China in a disadvantaged position.