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The Week Ahead – Renewed Risk Off

Published September 23, 2019

By Perry Mitchell

Monetary policy was the key theme of the past week with the Fed following in the ECB’s footsteps with a rate cut and a return to more stimulus. This week sees a number of high-level central banker speeches, but wavers in US-China trade relations and a steady wave of growth fear headlines will compete for our attention.

Risk aversion was prominent on Friday from the escalating trade tensions and would likely persist today following news indicating that the Pentagon will deploy US forces to the Middle East which will be “defensive in nature,” a result of the Iranian attack on Saudi Arabian oil facilities.

During the weekend, the Saudi Foreign Minister said that if the attack was launched from Iran, it would be considered an act of war. Houthi rebels in Yemen have warned foreign diplomats that Iran is preparing a follow-up strike to the missile and drone attack on Saudi Arabian oil and gas facilities.

The Aussie took knocks last week from several directions, both foreign and domestic. Driving the Aussie pair lower was the renewed risk-off sentiment in global markets amid concerns over the US-China trade standoff. A deal between the two nations suddenly looks to have come to a halt with the news that the Chinese delegate’s cancellation of a planned visit to farms in Montana and Nebraska. This was in response to commentary from President Trump, who about an hour earlier said that he was not willing to accept a partial deal with China. With the ongoing trade saga, the Aussie pair remains under pressure around two-week lows as trade opens around 0.6770 during this early Monday morning session.

Notable economic data releases and scheduled speaking engagements this week:

– ECB President Draghi speaks on Monday and Thursday

– RBA Governor Lowe Speaking on Tuesday evening

– NZ Official Cash rate Decision

– US GDP Q/Q, Core Durable Goods Orders M/M

– FOMC Press Conference

 

 

Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020.

Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020.

Any queries regarding the Administrations should be directed to encorefx@au.ey.com.