Weekly Market Commentary
UK PM May has finally resigned (officially leaving June 7), after completely failing to deliver Brexit, as promised on numerous occasions. She will be remembered as perhaps the worst conservative leader in a generation and leaves the party and country, in turmoil. The GBP is trading 1.2700, much lower than the economic performance dictates and this can be solely attributable to the Brexit chaos over three years. The new Tory leader may deliver Brexit and the GBP could literally roar back. The EU will now have to become a lot more flexible, as their intransigence was partly to blame for the disaster, so their leaders will be in a state of concern. The EUR trades 1.1120 and will be impacted by a new deal.
US/China trade fears receded, with Trump indicating the trade war 'could be over quickly', which may include Huawei and the electronic supply chain. This allowed a sigh of relief on markets, which rebounded, after a negative week. The fear is that an extended trade war will impact global growth and disrupt the current supply chain. US Durable Goods Orders contracted 2.1% and softening global economic data is a symptom of the disruption. This coming weekend is a Memorial Day long weekend in the US, so markets will be quiet until the US market reopens on Tuesday. Commodity currencies showed some signs of life to close the week, with the AUD jumping to 0.6920, while the NZD spiked to 0.6550. NZ Business Confidence data, out Wednesday the 29th of May, will be a key driver in the local market, although US/China trade developments will remain the macro influence.
Weekly Market Calendar
27/5 Memorial Day Holiday in the US, German Retail Sales
28/5 Australia Consumer Confidence, S&P Case Shiller Home Price Index
29/5 NZ Business Confidence, France GDP. German Employment, Bank of Canada Rate Decision
30/5 US Building Permits, US GDP, US Weekly Jobless Claims, US Pending Home Sales
31/5 NZ Consumer Confidence, Japan Employment, Japan Industrial Production, China Manufacturing PMI, Italy GDP, German CPI, US Personal Income/Expenditure, University of Michigan Sentiment
Paul Bettany
Collinson & Co
0406-744-923
paul@collinsonfx.com