Weekly Market Commentary
US equity markets closed the week much lower after President Trump extended the trade wars to Mexico. The Trump administration has threatened to impose 5% tariffs on all Mexican goods, if they do not act to control the US/Mexican border. Further he has said they will increase tariffs 5% every month, until there borders are under control, up to a maximum of 25%. This hit markets very hard and these border trade wars are threatening global growth and raising the possibilities of recession. Trump has few options and trade sanctions appear to be the most effective.
The coming week is a treasure trove of global economic data releases. The avalanche of data includes growth and employment numbers across global economies. The ECB and RBA both announce their latest rate decisions and monetary policies. The RBA is expected to cut interest rates, after deferring in the lead up to last months Federal Election, while the ECB is also expected to extend QE and extremely lose monetary policy.
The latest extension of US Trade Wars, to Mexico, hit equity markets hard and the Dollar reversed some of their recent gains. The EUR pushed back to 1.1150, while the Yen regained 108.40. The Brexit chaos continues, with the Conservatives now running a leadership battle to determine who will attempt to lead them and the UK, out of Europe? The GBP has suffered accordingly, trading 1.2630, awaiting some positive and constructive solution to this protracted problem.
The trade exposed countries will be adversely impacted by the escalation in global trade wars, but the decline in the US reserve, allowed these commodity currencies to settle. The AUD consolidated around 0.6930, in the lead up to the coming weeks RBA Rate decision, while the NZD pushed up to 0.6530 Post-Budget.
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
Thanks and Regards
Paul Bettany
Collinson & Co
0406-744-923
paul@collinsonfx.com