Weekly Market Commentary
US equity markets achieved record highs, as economic confidence flourished, with the prospect of a US/China trade deal became more certain. The overwhelming macro-economic issue, that has dominated markets, is the US/China trade war/deal. The US economy continues to outperform and corporate earnings continue to beat expectations. Equities are challenging record highs almost daily and demand has surged, pushing commodity prices higher, along with US Bond Yields.
The RBA and Bank of England both resisted the temptation for further rate cuts,, as economic sentiment rallied strongly, with the impending US/China Trade deal. The Australian economy has been challenged by the US/China trade war, which has threatened the existing global supply chain, but the détente now seems anon. The RBA was neutral to hawkish, about economic prospects which has been enhanced recently. The details of the deal may be far more damaging to the supply chain, as China switches to US suppliers, from existing Australian and NZ exporters
The strong economic sentiment has bolstered US Bond Yields and the Dollar. The EUR has slipped back to 1.1020, while the GBP has fallen back to 1.2750. The Yen has weakened, to trade 109.20, with little local economic progress. Commodity currencies have been severely impacted by the US/China trade war, but recent progress, has allowed some support for the associated currencies. The rising reserve has allowed the downward pressures to resume, with the AUD falling below 0.6900, while the NZD has retreated to 0.6320.
Interest rate differentials are now driving the overall directions of currencies. The US Dollar has a premium in interest rates that reflects economic performance, not risk, which dictates further downward pressure on the commodity currencies.
Weekly Market Calendar
11/11 NZ Credit Card Spending, Japan Trade Exports/Imports, UK GDP, UK Manufacturing/Industrial Production, US Trade Exports/Imports
12/11 Australia Consumer Confidence, RBNZ Inflation Report, UK Employment, German/EU ZEW Economic Sentiment, NFIB Small Business Optimism
13/11 RBNZ OCR Decision, German CPI, UK CPI, UK House Price Index, EU industrial Production, US Weekly Mortgage Applications, US CPI
14/11 US Budget, Japan GDP, Australia Employment, China Industrial Production, China Retail Sales, EU GDP, EU Employment
15/11 EU CPI, EU Trade Exports/Imports, US Retail Sales, Empire State Manufacturing, US Industrial/Manufacturing Production