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Weekly Market Commentary
US markets closed on a new record high Friday, after key Trump economic adviser Larry Kudlow, disclosed that the negotiating team was 'getting close to reaching a deal'. This relieved markets and resumed the recent surge in market confidence. US Retail Sales beat market expectations and continued to lead the booming US economy. The Chinese economic data reports the opposite message and it is easy to deduce who really needs the trade deal the most?! EU CPI data was in line with expectations and showed benign inflationary pressures. The US Dollar came off the boil, with the EUR regaining 1.1050, while the GBP broke above 1.2900.
Commodity currencies recaptured some lost ground, boosted by the growing positive sentiment, spawned by the growing confidence around the US/China trade deal. The RBNZ noted the improving sentiment when they refrained from further rate cuts to the cash rate. This was a shot in the arm for the previously flagging currency, although gains were soon erased by general market conditions and sentiment, but the softer reserve currency allowed the NZD to regain 0.6400 to close the week. The AUD has been suffering weak local economic conditions, highlighted by the rising unemployment rate during the week, which undermined the currency but the softer reserve allowed the currency to close the week above 0.6800.
Until the US/China trade deal is signed there will be speculation, both for and against, which will drive macro market direction. US markets continue to rumble on, while the European experiment seems to be stabilising, with the German economy narrowly avoiding a technical recession. Commodity currencies are trade exposed and will move in conjunction with speculation surrounding the 'phase one' trade agreement. Local economic data, will drive short term fluctuations, but the overall trend remains determined by macro global economic issues.
Weekly Market Calendar 18/11 NZ Services PMI, UK House Prices
19/11 NAHB House Market Index, Australia Consumer Confidence, RBA Minutes, EU Current Account, US Building Permits, US Housing Starts
20/11 Japan trade Exports/Imports, US Weekly Mortgage Applications
21/11 FOMC Minutes, NZ Credit Card Spending, OECD Economic Report, US Weekly Jobless Claims, Philly Fed Report
22/11 EU Consumer Confidence, US Existing Home Sales, US Leading Index, Japan CPI, German GDP, France/German/EU Services/Manufacturing/Composite PMI, University of Michigan Economic Sentiment, US Services/Manufacturing/Composite PMI, Kansas City Fed Manufacturing Index
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