6th October 2020 - A big day ahead in Australia with a RBA meeting on the same day as Federal Budget


Good Morning,

Market Headlines

Markets became confident overnight that the UK and the EU might agree on a post-Brexit trade deal after authorities from both sides agreed to extend negotiations until month-end. Wall Street closed with substantial gains, with the S&P reaching its highest in almost a month. Gold surged amid a weaker greenback and hopes of more stimulus coming from the US settling above $1,910 its highest level in over two weeks. Crude oil prices recovered on the back of rallying equities, trimming Friday’s losses. WTI ended at $39.30 a barrel

Currency

AUD/USD: 0.7164 – 0.7193

EUR/USD: 1.1720 – 1.1797

GBP/USD: 1.2900 – 1.2991

USD/JPY: 105.54 – 105.79

USD/CAD:1.3258 – 1.3288

NZD/USD: 0.6631 – 0.6652

AUD/JPY: 75.60 – 76.03

AUD/NZD:1.0802 – 1.0819

AUD Thoughts

A busy day ahead having the RBA policy meeting on the same day as the Federal Budget Announcement. Markets will be watching closely as there is some speculation that the RBA could lower the cash rate and potentially unveil a QE programme in the 5-10 year part of the curve.

The Federal Budget Announcement will also be closely watched for any surprises, though it already knows that more fiscal support is forthcoming.

AUD/USD remained within a range 0.7160/.7193 to start the week. Demand is likely to have grown around 0.7100 while offering interest should remain thick as we approach 0.7260/80.

Event Risk Data Today

Australia: The August trade balance is expected by the market to widen to $5.0bn as the July spike in imports reverses.

The RBA is expected to remain on hold this month. Market expects further easing in November.

The Federal Budget will be released at 7:30pm AEST. A high degree of support for the economy is anticipated.

New Zealand: The QSBO general business situation index is expected to rebound in Q3 (prior: -58.8).

Unites States: The largest trade deficit since July 2008 is expected to widen further in August (prior: -63.6bn, market f/c: -66.1).

JOLTS job openings will continue to be supported by business recovery (prior: 6618, market f/c: 6500).

FOMC’s Chair Powell will address the NABE Conference in Chicago at 01:40 AEST. The FOMC’s Harker (02:45AEST) and Bostic (05:00 AEST) will also speak.

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