By Rhys Miles
Cautious optimism is a well-overused term but is still the most appropriate to describe the underlying theme of this and every other trade negotiation between the US and China. Overnight reports that China is willing to accept a partial trade deal saw the previous night’s negativity partially reversed. If true, it is hoped that the trade war, whilst far from being resolved in the short term may have each of the participants realise that it is in their economies respective interests to achieve even a small agreement over certain issues.
Coupled with the release of the US Fed’s minutes from their September meeting reaffirming that the US economy is strong but emphasising that policy can be eased further if required to sustain expansion saw European and American equities rally up to one percent. US inflation tonight will provide a clearer picture particularly when taking into account recent underwhelming US data. Britain’s GDP data is also released tonight with the ongoing Brexit drama expected to have impacted these numbers quite unfavourably.
Locally, the Westpac Consumer sentiment number fell sharply in November and is significant because it takes into account last week’s RBA cash rate cut. Curiously, consumer sentiment has fallen after each RBA rate cut this year and the reaction has been larger after each decision.
On the currency front, the AUD did what it does best, absolutely nothing. Neither against the USD or the majors. Range bound is the order of the day.
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