Markets have been in risk-on mode

According to analysts at Westpac, financial markets have been in “risk-on” mode of late with optimism around global economic and political dynamics.

Key Quotes

“Central banks have hit the “pause” button as we approach the end of the year. Additional stimulus has already been deployed, with each of the RBA, the RBNZ and the US FOMC having lowered rates by 75bps so far in 2019.Policy makers are now monitoring developments to assess how economies respond.”

“We have pushed back the timing of our next US FOMC cut from December to the March quarter 2020, but we still see a further three rate cuts. We have also pushed back the timing of the RBNZ cut from November to February. For the RBA, we continue to expect a February rate cut, to a low of 0.50% – notwithstanding market pricing wavering on this. The economic outlook, globally and domestically, will continue to be challenged by structural headwinds, including weak productivity and a lack of investment.”

“Global sentiment has picked up as tail risks around Brexit and the US-China trade and technology war receded. Nevertheless, both issues remain in flux. The UK goes to the polls on December 12 and trade negotiations are fluid as the two nations negotiate a phase one deal. If a deal can be struck, it might see some rolling back of tariffs.”

“Against this backdrop, the AUD has rallied through USD0.69. We remain sceptical that positive sentiment will be sustained. A trade deal may yet prove elusive and the US Presidential election in 2020 will be a key source of uncertainty. We continue to expect the AUD to move lower in the first half of 2020, to USD0.66, a move supported by a downtrend in key commodity prices.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.