By Rhys Miles
A twitter inspired shot of optimism abounded last night after President Trump tweeted the US is “getting VERY close to a BIG DEAL with China. They want it and so do we.” The White House is expected to make an announcement shortly but sources suggest a “deal in principle” has been reached which involves the slashing of existing tariffs and cancelling the next round of tariffs scheduled for this Sunday.
US equities (Dow) rose by almost 0.80% with our local market forecast to rally 0.30%. Whether this equates to the Dec/Jan rally we have seen on the AUD so many times remains to be seen but a break through the strong resistance of 0.6875 overnight is positive and when details become clearer around the suggested trade agreement we may see a test higher. Against the EUR too the Aussie found another 0.30% after the ECB President referred to herself as “neither a hawk nor a dove but a wise owl” and left rates unchanged but signaled a preparedness for more economic stimulus.
Early reports are mixed at the moment in regard to the UK election with some reports indicating a tight outcome but most exit polls indicating a strong majority to the Conservatives. The latter appears most likely. The GBP appreciated almost 2% last night with the AUD losing a lot of ground towards the 0.5150 level.
Stay tuned because next week’s market could look a lot different to todays.
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