Weekly Market Calendar
12/8 NZ House Sales, NZ Credit Card Spending, US Mortgage Foreclosures, US Budget Statement
13/8 NZ Food Prices, Australia Consumer Confidence, Australia Business Confidence, German CPI, UK Employment, German/EU ZEW Economic Sentiment, NFIB Small Business Optimism, US CPI
14/8 Australia Consumer Confidence, China Industrial Production, China Retail Sales, German GDP, UK CPI, UK House Prices, EU Industrial Production, EU Employment, EU GDP, US Weekly Mortgage Applications
15/8 Australia Inflation, China House Prices, Australia Employment, Japan Industrial Production, Empire State Manufacturing, Philly Fed Survey, US Retail Sales, US Industrial/Manufacturing Production
16/8 NZ Manufacturing PMI, EU Trade, US House Sales, US Building Permits, University of Michigan Sentiment
Weekly Market Commentary
Markets were soft to close another week of economic drama. The week opened with a crash in global equities, after the Chinese reacted to increased US tariffs, by devaluing their currency. Global equities were in panic mode and Bond Yields crashed. The rest of the week was one of recovery, with bond yields stabilising and equities rebounding. Recover it did!
Trump was out trash-talking about China and confirming they wanted to do 'something', but that after 25 years of abuse, he was not ready! Key Trump economic adviser, Peter Navarro was using 'fighting talk'. He warned China against currency manipulation and promised consequences for their actions. The highly aggressive rhetoric promises further market volatility in the week ahead. The EUR was steady trading 1.1200, despite political upheaval in the form of the collapse of the Italian Government. Deputy PM Salvini announced the current Government was unworkable and called for fresh election. This should provide further political uncertainty within the EU.
The GBP fell back to 1.2030, after UK GDP contracted for the first time since 2012. The UK economy has been remarkably resilient, considering the turmoil created by Brexit over the last three years, but the chickens are coming home to roost as the October 31st deadline approaches. This bedlam is likely to continue until a resolution is forthcoming.
The NZD had collapsed early in the week, after the surprise 50 point rate cut, belling the cat over the 'real economic' situation the country was in. The initial shock saw the currency plunge below 0.6400, but the currency has regained some ground since. The AUD was not immune and also suffered severe downward pressures. These commodity currencies are severely dependent on the Chinese supply chain and therefore may experience plenty of pain ahead? The AUD will start the week below 0.6800,while the NZD attempts to consolidate it's position, above 0.6450.
Paul Bettany
Collinson & Co
0406-744-923