Collinsonfx Daily Market Commentary

US markets were calm and steady heading into key employment data releases tonight. The ADP report in the US signalled a slowing in private sector jobs growth, but Weekly Jobless Claims fell, so expectations are mixed heading into the release of Non Farm Payrolls and the headline employment rate. A strong number may well trigger a rally in equities to close the week. US Factory Orders and Durable goods orders were both positive, in stark contrast to the comparative EU data, which revealed further contractions. The EU GDP number was static on 1.2% annual growth and allowed the EUR to regain 1.1100, while the GBP surged to 1.3150.

The weaker reserve allowed the NZD to reach 4 month highs, pushing up towards 0.6550, while the AUD traded up to 0.6850. The RBNZ released the latest Bank Capital requirement plan yesterday. The ratio requirements have been lifted, raising the cost of lending to the punter, but was tempered by the Central Bank, by extending the time frame out to seven years. The RBNZ also confirmed monetary policy was in a holding mode, allowing further support for the currency. The RBNZ has joined the RBA and Bank of Japan in holding rates, allowing the record low rates to flow through into the economy, while supporting massive increases in fiscal spending. The NZ and Australian Governments have announced massive infrastructure programs being 'brought forward', to boost economic growth and take advantage of the record low interest rates. It also happens to be politically advantageous!?

The US/China 'Phase One' agreement looks to be on track, ahead of the deadline of the 15^th of December, when the US implement a new schedule of tariffs on the Chinese. Trump mentioned the that the negotiations were 'going well'! Markets will focus on US employment numbers to close out the week.