Weekly Market Overview

What a positive week for risk. The USMCA deal was completed and focus immediately, shifted onto the December 15 tariffs and whether President Trump was going to delay them or not. On Thursday Trump tweeted that the US was getting ‘VERY close to a BIG DEAL with China, they want it and so do we’. Tariffs were rolled back and reduced and Phase 2 negotiations are due to start after the 2020 Presidential elections. Risk assets spiked higher (Oil, AUD, NZD and CAD) while safe havens gold and silver fell alongside JPY and CHF. In the UK the Conservative party se-cured a majority win and the GBP soared +2% on the news that Brexit will finally happen for the UK. What a week for risk.

 

Key events from the past week

AUD: RBA rate statement, Tuesday Dec 3 Governor Lowe indicated that the RBA are at a pause in their rate cuts. They hinted they were happier on the side-lines than the market was expecting. This initially resulted in AUD strength which was eventually supported into the end of the week by the positive risk tone.

USD: FOMC statement, Wednesday Dec 11 Powell repeated his phrase from the last rate statement that he would need to see a ‘significant move up in inflation that’s persistent before we would even consider raising rates’. It was a dovish hold and interest rates are expected to stay at current levels for now. USD fell.

EUR: ECB statement Thursday Dec 12 The first rate statement from the new ECB President Christine Lagarde was eagerly awaited, but there were few surprises. The ECB said that risks remain tilted to the downside and international trade uncertainty continues to weigh on eurozone manufacturing data. There was a repeat of Draghi’s appeal for fiscal stimulus and no surprises.

 

Key events for the coming week

NZD: GDP and Business Confidence, December 17 & 18 The RBNZ have made a shift to data dependence going forward with only a 20% chance of a cut seen at their February meeting. GDP data will be key this week.

CAD: Inflation, Wednesday,  December 18   Inflation in Canada stood at 1.9% at the October print and all the core measures were between 1.9% & 2.2%. In addition, the economy performed better in Q3 at 1.3%. However, labour data was weak last Friday. A strong inflation print here will keep the BoC’s confidence

AUD: Employment data, Thursday,  December 19 The RBA took a more hawkish tone at their December rate meeting, but the data since then has been rather weak. A weak labour reading here will cause more doubt over whether the Australian economy has really reached a ‘gentle turning point’.

 


 

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