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Mortgage rates hike, Aussie moving sideways

Published September 7, 2018

Author: Dennis Li

The AUD edged higher overnight while it remained in its weekly range. It pushed back up from its low of 0.7163 to open this morning at 0.72  Yesterdays knee jerk reaction was caused by the Commonwealth Bank and ANZ joining Westpac in lifting mortgage rates citing higher funding costs.  We also saw a similar picture from the AUDEUR nosediving down close to a long term support of 0.6150 only to open back to where we started, just under 0.62.

As the risk-off sentiment continues to dominate markets, investors will keep a close eye on EU GDP and US employment data this evening. Chinese trade balance on Saturday will be an interesting insight to future AUD direction.

  • The number of Americans filing new claims for unemployment fell to a nearly 49-year low last week, suggesting a robust labor market which paves way for the September rate hike.
  • Canada’s Foreign Minister Chrystia Freeland reiterated on Wednesday that talks to revise the NAFTA agreement with the US has been ‘positive and constructive’ while it will continue to resolve the remaining issues.
  • China’s commerce ministry warned on Thursday that China will be forced to retaliate if the US imposes any new tariffs on China’s imports as after the end of a public consultation phase later today.
  • The ASX suffered its worst day yesterday since March while stock markets around the world declined on Thursday and emerging markets stocks fell for the sixth day, investors continued to steer away from risk and braced for an escalation in Sino-US trade war.