Weekly Market Recap
Week in review
- Australian preliminary retail sales falls 4.2% in August
- U.S. composite PMI falls to 54.4
- Eurozone composite PMI falls to 50.1
- Australia building approvals
- U.S. labour market report
- Australia private sector credit
Thought of the week
Speculation that the RBA is close to further easing pulled the rug out from under the Aussie dollar last week as some commentators suggested action may come as soon at the October meeting. However, if the RBA was to ease it may wait until November, or even next year, to get a clearer picture of the economy after the Government Budget announcement in October and COVID restrictions are eased across states in the coming weeks. When it comes to the currency, the relatively restrained approach to unorthodox monetary policy by the RBA compared to other central banks has provided support to the Aussie dollar. But so has the risk on sentiment in markets. The cross rate to the U.S. dollar has become highly correlated to the performance of the S&P 500. A risk on stance usually implies a weaker U.S. dollar, but market nerves of late have seen the greenback strengthen once again. The may keep a lid on any Aussie appreciation even if the RBA doesn’t deliver next month.
Risk on sentiment has lifted the AUD
13 week rolling correlation of the AUD/USD and S&P 500
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.