Collinsonfx Daily Market Commentary

Markets had a quiet start to the week after a tumultuous week previously. This culminated in the huge Non Farm Payroll number, released Friday and the record low headline Unemployment rate. This allowed equity markets to rally strongly and confidence to surge. Key Trump adviser, Larry Kudlow, confirmed that both sides were 'close to a deal' in 'Phase One' of the US/China trade deal. US markets are running hot, in complete contrast to most other developed nations around the world. The EUR traded around 1.1050, while the GBP pushed up to 1.3150, supported by the Conservatives lead in the 'Brexit Election' polls.

The NZD continues to perform well, despite the volcanic eruption dominating news, pushing up to 0.6550. The Australian Dollar traded 0.6830, diverted by bushfires and a slowing local economy, but supported by the positive news on the US/China trade front. This week sees a plethora of global economic data releases, highlighted by the FOMC meeting and the ECB rate decision, which will dominate market direction. The Fed is likely to resist further rate cuts, although support expansive monetary policy, while the ECB is restricted in rate cuts, but could add more liquidity to the system.

Amidst the political disruption in Washington, it appears the House may take up the USMCA replacing the NAFTA, which would be a significant further boost to the US economy.