Collinsonfx Daily Market Commentary

US equities drifted off new and recurring record highs, while European economic growth data, suggested that Germany may dodge a technical recession. US/China trade talk speculation was again focused on issues including agricultural imports, enforcement and tariffs cancellation. German GDP numbers came in a 1%, narrowly avoiding a technical recession, but this is hardly reason to break out the champagne? EU GDP was slightly higher, at 1.2% annually, while industrial production continued to contract. Fed Chair Powell was talking about the economic boom the US economy was experiencing and that the existing monetary policy was doing the job, thus removing any need for further rate cuts. The EUR was steady, trading around 1.1000, while the GBP jumped back to 1.2880. The GBP could see some serious gains, if the polls are correct and the Conservatives win the upcoming Brexit election.

Australian Unemployment data was weaker than expected, with the headline rate rising to 5.3% from 5.2%, reflecting the headwinds the economy has been suffering for some time. The weak labour market is a reflection of the overall performance of the economy and the currency suffered accordingly, plunging back to 0.6780, while the US/China trade headwinds added to the currencies performance. The NZD was largely unaffected by the Australian data in local trade, but the overnight markets considered this detrimental and the trade news forced a fall in the KIWI, which has crashed back to 0.6365.

The macro US/China trade issue continues to dominate the trade exposed commodity currencies, while important local data and economic growth drives daily trade fluctuations.