News & Analysis

European shares finish mixed – trade worries continue; Weaker manufacturing data hurts the GBP – AUD and EUR snap losing streaks

Sep 4, 2018 | Market Updates

Upcoming high impact news:

14:30 AUD Cash Rate EXP Hold 1.50% – RBA Rate Statement
19:30 AUD RBA Gov Lowe Speaks
22:15 GBP Inflation Report Hearings
00:00 USD ISM Manufacturing PMI

Lower liquidity overnight as U.S and Canadian markets observed the Labor Day holiday.

Europe had a mixed session to start the month with trade worries still lingering on traders minds. The Automotive sector continued lower losing a further 1%. Last week, the European Union said it would respond in kind if President Donald Trump reneged on his pledge not to impose car tariffs. Faurecia, Porsche and Volkswagen all ended down over 1.5%. Single stocks –  Dechra Pharmaceuticals tumbled  21.4% after announcing it had started contingency plans for a hard Brexit. SBM Offshore jumped 10.7% after the Dutch company announced a final settlement to resolve alleged improper sales practices. By the close the FTSE added 72.18 – The DAX closed – 17.65 and the Euro Stoxx added 1.92.

Traders are also watching the situation in Argentina after peso sold off, Argentina’s government said Monday that it planned to modify the taxes charged on exports of some commodities. President Mauricio Macri is under pressure to increase public revenue, especially after unexpectedly saying he would ask the International Monetary Fund for the early release of funds from a $50 billion financing deal. – CNBC

Oil finished lower to flat in a quieter session, OPEC supply and Iran sanctions are some of the main current drivers. OPEC output rose 220,000 barrels per day (bpd) in August to a 2018 high of 32.79 million bpd. Traders are looking ahead to later in the year when U.S. sanctions are expected to curb exports from Iran. U.S. drillers added oil rigs for the first time in three weeks, Baker Hughes reported Friday. USOUSD closed  22 cents higher after testing 69.28 to the downside.

Gold finished flat after a small test higher and a test lower during the Asian session. Price closed just above 1200 maintaining that support level for now. The USD was mixed overnight, it gained to the CAD and GBP after weaker manufacturing data took out demand. The EUR and AUD closed higher ending losing streaks. The Yen closed slightly higher to the USD but ended lower to the EUR and AUD. The GBP slipped on overall weakness losing 53 pips. After Bitcoins, strong start to Monday price finished flat with little movement.

This morning the USD is strengthening to risk, the Yen is also up and about making gains across risk and to the USD. Local shares ASX200 has started the morning slightly lower. The RBA meets today at 14:30 rates are expected to remain on hold at 1.50%. Traders will be looking for clues in the RBA rate statement. Asian stocks are opening the Nikkei has started lower (-76.50).

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Sources; CNBC – All times are AEST

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