FINANCIAL MARKET REVIEW FOR AUG 21, 2018
It was another quiet session on the data front through the Asian session, with no material stats released, leaving the markets to consider the U.S President’s latest whine over the FED’s the 2 rate hikes through the year and planned move in September. While there were no stats to consider, the Aussie Dollar was in action in the early part of the day, with the release of the RBA meeting minutes. There were no surprises in the meeting minutes, following the release of the rate statement earlier in the month, with salient points from the minutes including: Economic forecasts for the Australian economy were largely unchanged and expected to be just over 3% over 2018 and 2019, supported by strong public demand, resource exports, further growth in non-mining business investment and steady consumption growth. Recent data on wage growth and expectations of a further tightening in labour market conditions provided comfort that household income growth would continue to rise gradually to favour the outlook for consumption. Uncertainty over the outlook for consumption had eased, with the recent increase in minimum wage, the announcement of future tax cuts and expectations of a further tightening in labour market conditions providing support. Inflation is expected to rise to 2.25% in 2020. Growth in the Chinese economy had slowed, with the direction of international trade policy in the U.S continuing to be a source of uncertainty for the global outlook. The RBA noted possible effects of drought conditions on certain sectors. A continued move by the FED could see further U.S Dollar appreciation that would be a positive for the Australian economy. Since progress on unemployment and inflation was likely to be gradual, members agreed that there was no strong case for a near-term adjustment in monetary policy. The Aussie Dollar moved from $0.73386 to $0.7350 upon release of the minutes, though much of the upward momentum in the Aussie Dollar was off the back of falling a Trump driven U.S Dollar slide and a pickup in market risk appetite following the overnight gains in the U.S session. At the time of writing, the Aussie Dollar was up 0.16% to $0.7352. Further support for the Aussie Dollar came off the back of news that Prime Minister Turnbull survived a leadership challenge, though expectations are that Turnbull’s days are numbered, with the opinion polls showing that a Turnbull led Liberal Party would be defeated by the Labour Party next year. Elsewhere, the Kiwi Dollar was up 0.21% to $0.6655, while the Japanese Yen was flat at ¥110.07 against the U.S Dollar, the Yen sliding back, in spite of Dollar weakness through the morning, as risk appetite through the session left demand for the Yen on the weaker side. In the equity markets, it was a mixed start to the day, with the Nikkei down 0.03%, recovering from early losses, as gains in the Yen reversed, with the ASX200 also in the red, down 0.88% at the time of writing, weighed by the financial sector and mining stocks that weakened following BHP earnings results that were down due to one off charges Following the U.S equity markets into positive territory were the CSI300 and Hang Seng, which were up 1.88% and by 0.44% respectively, with hopes of progress on trade talks tomorrow and sentiment towards earnings providing support. The Day Ahead: For the EUR, it’s a quiet day ahead on the data front, with no material stats scheduled for release through the day, leaving direction in the hands of market risk appetite, though Trump’s return to focus on FED monetary policy and the negative comments towards this year’s rate hikes ultimately did the damage to the Dollar early.
vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com
FINANCIAL MARKET REVIEW FOR AUG 21, 2018
At the time of writing, the EUR was up 0.36% to $1.1523, with only the Oval Office able to create a reversal of the early gains. For the Pound, stats are limited to August’s CBI industrial trend order numbers that are forecasted to be Sterling negative, which could reverse some of the morning’s early gains should the number be in line with or worse than forecast, while Brexit will remain the key driver. At the time of writing, the Pound was down up 0.23% to $1.2827, with Brexit chatter the key driver through the day, the early moves against the Dollar coming off the back of Trump’s gripe at monetary policy. Across the Pond, with no material stats scheduled for release through the day, we can expect the release of the Redbook to provide the U.S Dollar with some direction later in the day, though it’s ultimately going to boil down the Oval Office, as the markets get ready for trade talks with China that begin tomorrow and the roll out of fresh tariffs on Thursday. At the time of writing, the Dollar Spot Index was down 0.35% to 95.567, with the Oval Office continuing to be the key driver through the day. For the Loonie, economic data is limited to June wholesale sales that could provide further support should the numbers come in better than forecasted, though updates from NAFTA talks between the U.S and Mexico will likely be the key driver, the administration’s approach towards Mexico likely to be faced by Canada down the track. At the time of writing, the Loonie was up 0.15% to C$1.3028, with today’s data to provide direction along with any update on NAFTA.
vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com