IG Markets - Morning Prices April 1

Risk assets were mixed with currencies rising on the back of a weaker US dollar, while equities lost ground. The US March ISM manufacturing PMI number came in significantly weaker than expected, (51.3 versus a 54.2 consensus) and this was the key event of the session. Traders continue to react to US economic data as they search for any indication of a potential change in QE timing. As a result, any signs of weakness in US economic figures will be used as an opportunity to sell the greenback, while strength in US data will see it bid higher.

In recent times, the correlation between the USD and US equities has been quite high, and the overnight session was further testimony to this as equities also lost ground. This puts quite a lot of weight on Friday’s non-farm payrolls numbers. EUR/USD managed to post a high of $1.287, while GBP/USD pushed to a new high of $1.524. AUD/USD recovered from below $1.04, and managed to post a high of $1.0432. The pair remains steady ahead of the RBA meeting. The RBA meeting takes place as usual at 14:30 (AEDT), and traders will be keen to hear more from the bank on whether retain the line that the ‘inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand’. Given the improvement in some of the domestic data points, we feel the risk is it will remove this mild easing bias and run a neutral mantra. Our base case however, is that it continues to leave the door ajar, and there is a good chance the statement will look very similar to last month, with a few tweaks. With the USD losing ground, USD/JPY plunged to a low of 93.17 and remains quite depressed heading into this week’s BoJ meeting. Analysts have pinned this as the key event of the week, being Haruhiko Kuroda’s first meeting at the helm. It will be a bold move to be short the pair heading into the meeting, as he is likely to announce some significant easing steps.

Ahead of the open, we are calling the ASX 200 up 0.2% at 4977. We wouldn’t be surprised to see the market relatively steady heading into the RBA decision, just in case there is a change in tone. It is still generally hard to get a read of where the resources will open, given the negative response to disappointing China and US data, while a weaker USD lends some support. BHP’s ADR is pointing to a 0.5% fall at the open to $32.60, despite iron ore remaining steady at 137.30. Qantas could do nicely on the open, after commentary detailing that European bookings rose six-fold, as its new alliance with Emirates has cut flight times. Any good-will towards its international business should put upside pressure on its share price, especially as its budget carrier Jetstar looks set to increase its presence in the international arena. Also, keep an eye on Billabong today with the company likely to detail any changes to the bid price from the different suitors. With the stock trading at a decent discount to the $1.10 offer, the market is thoroughly prepared for a lower bid; however the question remains exactly how low will they revise their offers?

Market Price at 9:00am AEST Change Since Australian Market Close (Thursday 28th March) Percentage Change
AUD/USD 1.0427 0.0000 0.00%
ASX (cash) 4977 11 0.22%
US DOW (cash) 14577 -8 -0.05%
US S&P (cash) 1560.3 -7.5 -0.48%
UK FTSE (cash) 6406 -12 -0.19%
German DAX (cash) 7790 -35 -0.44%
Japan 225 (cash) 12030 -373 -3.01%
Rio Tinto Plc (London) 30.86 -0.19 -0.61%
BHP Billiton Plc (London) 19.17 -0.24 -1.26%
BHP Billiton Ltd. ADR (US) (AUD) 32.59 -0.17 -0.53%
US Light Crude Oil (May) 96.97 -0.26 -0.27%
Gold (spot) 1599.30 2.2 0.14%
Aluminium (London) closed - -
Copper (London) closed - -
Nickel (London) closed - -
Zinc (London) closed - -
Iron Ore 137.30 0.0 0.00%

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday’s close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

Please contact IG Markets if you require market commentary or the latest dealing price.

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