Weekly Market Commentary
Equity markets finished the week lower, as negative growth sentiment permeated, sparked by the impact of the US Mid-Term election. The split Government will curb Trumps economic growth program, that has unleashed the economic beast, as partisanship controls policy. The markets initial reaction was positive, due to historical success of divided Government, but times have changed. The Democratic Party has moved far more to the left, so areas of bipartisanship are fewer, while the political personalities are not attracted.
GDP growth prospects will be dampened and this will be globally contagious. The softening US Economy could lead to recession, where excessive debt (private and public) comes in to play. The Fed reiterated their intention to retain the hawkish monetary policy, but economic conditions may force neutrality upon them. Oil dipped below $60/barrel in Friday trade, reflecting growth prospects and supply management.
The Dollar regained some mojo, with the EUR retreating to 1.1330, while the GBP fell back below 1.3000. US economic prospects will impact Europe and the world. The Chinese/US trade negotiations will drive the trade exposed, commodity currencies. The AUD retreated to 0.7220, while the NZD slipped to 0.6730, despite strong economic data and a neutral RBNZ.
Growth data will be released in the coming week and become a focus, in the form of global CPI and GDP numbers, which will not yet reveal the impact of the US mid-term elections. These are historical. Commodity currencies remain heavily influenced by the US/China Trade negotiations.
Weekly Market Calendar
12/11 NZ Credit Card Spending, Bank of Japan Bond program
13/11 NZ Food Prices, Australia Consumer Confidence, Australia Business Confidence, German CPI, UK Employment, German/EU ZEW Sentiment, NFIB Small Business Confidence
14/11 Australian Consumer Confidence, Japan GDP, Australian Wage Prices, China Retail Sales, China Industrial Production, Japan Industrial Production, German GDP, UK CPI, EU Industrial Production, EU GDP, EU Employment, US Weekly Mortgage Applications, US CPI
15/11 Australia Employment, China New Home Prices, EU Trade, Empire State, US Retail Sales, Philly Fed, US Weekly Jobless Claims
16/11 NZ Manufacturing PMI, EU CPI, US Industrial Production, Kansas City Fed Manufacturing Activity
Paul Bettany
Collinson & Co
0406-744-923
paul@collinsonfx.com