Weekly Market Commentary
Market have settled in nicely to the 2019 year. The process of the US/China trade negotiations has calmed fears the markets had about the trade war. Global corporates have been expressive in their commentary about the impact of a slowdown in the Chinese economy and the flow-through to the bottom line. Apple, Land-rover and many others have reviewed growth forecasts lower so the impact is real. The positive is that the pressure is on the Chinese to close a trade deal with the Trump administration.
The other major destructive event impacting markets, was the Fed and their hawkish monetary policy. The Fed Chair Powell, has relaxed his bullish tone, citing 'patience' towards monetary policy. This has also installed renewed confidence to markets. US Bond Yields have reacted accordingly, falling back to below 2.70%, taking the pressure off global interest rates and investment/debt stress. The Dollar has retreated with the market sentiment, allowing the EUR to trade 1.1480, while the GBP jumped to 1.2850.
The UK and Europe remain enmeshed in the 'Brexit' chaos, which continues to dominate European and British markets. A 'No Deal Brexit' looks the likely outcome, which will adversely impact the EU, who will miss out on massive reparation Dollars and suffer trade obstructions. The UK will also suffer consequences, but they have already lived the worst case scenario, thus they are likely to benefit the exit from the EU.
Commodity currencies are heavily trade exposed and have been major beneficiaries of the progress on US/China trade negotiations. The AUD has broken back above 0.7200 and the NZD has pushed back to 0.6830. Markets will look toward US Retail Sales and the release of the Fed's Biege Book but US/China Trade speculation will dominate the market atmosphere.
Weekly Market Calendar
14/1 China Trade Exports/Imports, NZ Dairy Auction, EU Industrial Production, US Trade
15/1 NZ Food Prices, EU GDP, EU Trade, Empire State Manufacturing
16/1 NZ House Prices, NZ Credit Card Spending, German CPI, UK CPI, UK House Price Index, US Retail Sales, US Weekly Mortgage Applications, NAHB House Market Index, Fed's Biege Book
17/1 EU CPI, US House Sales, US Building Permits, US Weekly Jobless Claims
18/1 Japan CPI, Japan Industrial Production, EU Current Account, UK Retail Sales, University of Michigan Sentiment
Paul Bettany
Collinson Forex
Mobile 0406-744-923
paul@collinsonfx.com