By Rhys Miles
Continued optimism around the outcome of the “first phase agreement” on trade talks between the US and China has propelled the Dow through 28,000 for the first time and yet another record high. Reports of “constructive” phone calls between the two parties discussing each other’s core issues and an agreement to maintain close communication has, to this point, allayed fears at least in the short term that either party may spit the dummy over a non- negotiable point.
Unfortunately, this positivity hasn’t been reflected in the AUD which is still feeling the effects of last Thursday’s poor jobs data and a 2% fall against the NZD after the Kiwis left interest rates on hold. Since April the growth differential between the two economies has favoured the AUD but the latest activity suggests momentum may be shifting to the NZD. The AUD’s recent 60 point fall against the EUR has also been consolidated after the EUR was the greater beneficiary of the better global risk sentiment and more reassuring growth news. Manufacturing data later this week in Europe should be the catalyst for a more defined move on the EURO.
Locally this week we see the RBA monetary policy meeting minutes released on Tuesday, US Fed minutes released Thursday and a plethora of manufacturing data released offshore but nothing independently that has the potential to be market-moving barring a shock announcement.
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