Weekly Market Commentary
The huge recovery global equity markets are experiencing in the 2019 year is suffering an interruption. There has been media reports that the US/China Trade negotiations are not going to meet the deadline. Key Trump advisor, Larry Kudlow has stated that there is a 'sizable way to go'. Trump remains confident of an agreement but there is no scheduled summit between himself and President Xi. The failure to reach agreement is a direct threat to global growth and is therefore impacting markets. The Fed has come to the party, but the threat to global growth remains a subject of speculation.
Brexit chaos continues to threaten the UK and Europe and all the latest economic data points to a slowdown, if not recession, in Germany and the EU. The Brexit chaos has been built in to the dramatically underperforming GBP, although the economic statistics continue to contradict the anti-Brexit Bank of England Governor Carney? The EU fall into recession would be confirmed by a 'No Deal' Brexit, while ripping a massive hole in their budget. This scenario is a 'black swan' event for the EU and they are starting to panic. They may need to appease the UK and compromise the agreement, or suffer severe consequences. The new week sees a plethora of UK economic data, including GDP, Trade and Industrial/Manufacturing production. The data has been strong despite the Brexit chaos and Governor Carney has avoided 'QT' under the ruse of Brexit. The GBP will open the weeks trade around 1.2950, while the vulnerable EUR will test the downside of 1.1300.
Trade exposed currencies have been hit hard by the negative speculation surrounding the US/China trade negotiations. The AUD has crashed back under 0.7100, assisted by dovish statements from the RBA Governor, while the NZD trades in the low 0.6700's. The RBNZ will release the latest OCR this coming week. This is likely to adopt the dovish stance of the Fed and the RBA, releasing pressure on interest rates and the KIWI. The China/US trade scenario will continue to drive these commodity currency until a final solution is reached.
Weekly Market Calendar
11/2 UK GDP, UK Trade Exports/Imports, UK Industrial/Manufacturing Production
12/2 NZ Credit Card Spending, Australia Consumer Confidence, Australia Business Confidence, NFIB Small Businss Optimism, NZ House Prices
13/2 RBNZ OCR, UK CPI, Australia Consumer Confidence, EU Industrial Production, US Weekly Mortgage Applications, US CPI
14/2 Japan GDP, China Trade Exports/Imports, German GDP, EU Employment, EU GDP, US Weekly Jobless Claims
15/2 NZ Manufacturing PMI, China Current Account Exports/Imports, China CPI, Japan Industrial Production, UK Retail Sales, EU Trade, Empire State Manufacturing, US Retail Sales, US Industrial Production, University of Michigan Sentiment
Paul Bettany
Collinson & Co
0406-744-923
paul@collinsonfx.com