Weekly Market Commentary
The US Dollar surged overnight, as equity markets felt the wrath of participants, unsettled by a spreading global trade war. The EUR crashed below 1.1400, while the GBP fell to 1.2750, teasing new lows. The global trade wars are spreading and intensifying. Trump has imposed massive tariffs on Turkish steel and aluminium, 50% and 20. %, respectively! Trump has used these economic weapons effectively, to force change of economic and political behaviour, spreading some fear to markets. Trump has imposed tariffs on allies and economic partners to improve the balance of trade relationships, on China, NAFTA and the EU, which are succeeding. He has also used trade sanctions to combat political dysfunction, in the form of North Korea, Iran and now Turkey, with some success.
The surging reserve translated into a massive hit to commodity currencies. The AUD fell below 0.7300, while the NZD collapsed to 0.6575, already suffering severe losses. These currencies are extremely vulnerable to global trade wars, as they are heavily trade dependent, thus adding to the downside pressures.
The coming week will look at global economic growth and inflation, while the Geo-Political and Economic events will dominate markets.
Weekly Market Calendar
13/8 NZ Food Prices, NZ Services Index, Australia Consumer Confidence
14/8 Australia Business Confidence, China Retail Sales, China Industrial Production, Japan Industrial Production, German GDP, German CPI, EU Industrial Production, EU GDP, German/EU ZEW Economic Sentiment, NFIB Small Business Optimism
15/8 Australia Consumer Confidence, US CPI, UK House Prices, US Weekly Mortgage Applications, Empire State, US Retail Sales, US Industrial/Manufacturing Production, NAHB House Market Index
16/8 Japan Trade Exports/Imports, Australian Inflation Report, Australian Employment, UK Retail Sales, EU Trade, US Weekly Jobless Claims, US House Starts, US Building Permits, Philly Fed Report
17/8 EU Current Account, EU CPI, US Leading Index, University of Michigan Sentiment
Paul Bettany
Collinson & Co
0406-744-923