AUD takes a tumble as NAB hikes its variable mortgage rates

Stock Markets

Australian shares are set to edge higher following a mixed trading session in the US and a better than expected Australian labour market report for December. Eight of the eleven major sectors comprising the S&P500 closed in positive territory, with the information technology, energy, and industrials sectors seeing the largest percentage gains. The Dow Jones and S&P500 were both marginally down overnight, with the indices losing 22.38 (-0.09%) and 2.37 (-0.09%) points respectively. The labour market report revealed that the unemployment rate has dropped 0.1% to 5.0% which signals an improvement in Australia's overall economic health. The forecasted unemployment rate was 5.1% for December, so the fact that the actual figure was lower than expected should add some positive sentiment to the market. ASX 200 futures are currently up 39.5 points. 

Commodities and Currencies

Brent crude prices have benefited from hopes that OPEC will manage to achieve production cuts and easing trade tensions between the US and China. Brent crude has rebounded 0.1% and is sitting at US$61.20.

The spot price of gold is down about $4.00 (-0.31%) and is now hovering around US$1280.00. From a technical perspective, it still remains in its medium-term uptrend despite the recent pullback.

The AUD saw an immediate rise following a better than expected December labour market report. However, these gains were short lived as the AUD fell almost 1.0% in the wake of NAB increasing its variable mortgage rates. The AUD then pared some of its losses as the market realised that this would put more pressure on the RBA to act to arrest a weakening dollar. The AUD is currently sitting at US70.92¢ (-0.6%).

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.