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Markets calm for the time being

Published May 16, 2019

Author: Rhys Miles

An uneasy calm seems to have developed in the financial markets over the last two sessions with a wait and see approach being the philosophy surrounding the US/China trade dispute.  Trump’s overnight announcement that the US will delay the imposition of auto tariffs on some of its major trading partners aided equities markets with the Dow enjoying an almost 0.50% rally. This was despite US retail sales data released last night being particularly poor.

This and other recent poor US data has reinforced expectations of rate cuts from the Fed by the end of the year but did not aid the AUD at all. As mentioned yesterday, rate cuts from the RBA have been factored in and will continue to weigh on the AUD until the RBA suggests otherwise. Coupled with weak Chinese data yesterday, the global growth story and fears of a rapid slow down won’t go away and as a consequence the AUD is friendless.

Our wages data yesterday was slightly worse than expected with all eyes on today’s employment data for, hopefully, some positive direction.