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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Trade comments appear to lift sentiment

Published February 13, 2019

by Nicholas Cork

The USD has ended its 8 day winning streak as signs of progress in a few areas have allowed an element of risk-on, broadly reflected by a weakening of the YEN to year lows as risk averse posturing is unwound. Global equities rallied as progress in Trade appears to have been made, and Trump has been active on the wires saying “If we’re close to a deal where we think we can make a real deal and it’s going to get done, I could see myself letting that slide for a little while. But generally speaking I’m not inclined to do that.” Other progress appears to have been made on the Border Wall funding which should provide an avenue to allow the US government to remain open, with Trump saying about the plan, “I have to study it. I’m not happy about it,” however “I don’t think you’re going to see a shutdown.” He could then not help adding  “If you did have it, it’s the Democrats’ fault.” So what appears a shift back to some normality is apparently taking place and the market is cheering.

Across the Atlantic, Brexit still dominates with May stating the obvious to UK parliament overnight … “The talks are at a crucial stage. We now all need to hold our nerve to get the changes this House requires and deliver Brexit on time.” Opposition leader Corbyn accuses her of running down the clock, but more importantly the European Parliaments Brexit rep responded by saying “I ask myself what are these negotiations at a ‘crucial state’ raised in the House of Commons? The way forward is cross-party, not kicking the can towards a disastrous no deal.”  A fair comment too by the sounds of it…

Locally the AUD has found its way back to 71 cents as the tensions around trade ease a touch, and RBA’s head of Economic Analysis has just had some comments released to the market saying that their views on the domestic economy have shifted in that they are surprised by the weakness in consumption compared to the strength of the labour market, and they are uncertain if consumption can keep outpacing income growth, however they are confident on labour market, confident wage growth will pick up, and no loss of momentum in business confidence……   

In NZ the focus will be on the RBNZ Monetary Policy Statement at 2 pm NZ time with no change in rates expected, but the market will be searching for clues on the path ahead after changes noted from the RBA and the US Fed upset markets.

AUD looks like remaining within .7050/0.7150 today.   Chart : REUTERS