Collinsonfx Daily Market Commentary

Daily Market Commentary

Markets opened the week fairly neutral, after a week of gains, supported by the progress of the US/China trade talks. The positive overtones continue, with news the Chinese are advocating the delay of further US tariff implementation, in exchange for increases in US agricultural imports. Key US negotiator, Treasury Secretary Mnuchin, also confirmed that there was a conceptual agreement surrounding an enforcement mechanism in place, regarding IP theft. Market sentiment has risen, with the trade talk developments, allowing equities to approach record highs and the Dollar to settle. The EUR traded 1.1050, while the GBP surged to 1.2350, mired in the ongoing Brexit chaos.

Chinese trade data confirmed a big fall in Chinese exports to the US and this explains the Chinese enthusiasm to complete the negotiations for a new deal. Japanese GDP continued to dwindle, falling annually to 1.3%, allowing the Yen to fall to 107.10. NZ Manufacturing also contracted, but the commodity currencies have received a boost of confidence, with the US/China trade developments and the drifting reserve. The NZD jumped to 0.6430, while the AUD spiked to 0.6865, further strengthened by the recent inaction by the RBA.

US/China trade and Central Bank speculation, leading into the ECB's rate decision, will dominate markets for the remainder of the week.