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Trade still the focus

Published November 28, 2018

Author: Nicholas Cork

AUDUSD consolidated in the low 72’s overnight as trade issues still resonate. Trump threw a spanner in the works when he threatened tariffs on European cars as early as next week, which saw the AUD test 72 cents and the EURO sub 1.1300. Trump does seem to be reeling a touch from the General Motors announcement to cut 14,000 staff and slash production, and has now threatened to pull their subsidies. From here we all await dinner on Saturday night in Buenos Aires between Trump and Xi, with the White House economic adviser (conduit) Larry Kudlow saying Trump sees “a good possibility a deal can be made” with China…….. AUD still contained by 0.7150/0.7300 for now.

The USD was back on the front foot against most of the G10 overnight as Brexit still drags on the GBP, the EURO hit by tariff talk and the CAD was sold on widening Interest Rate differentials with the US (similar to AUD + NZD woes).  U.S. consumer confidence index declined to 135.7 which was in line with forecasts but a notable fall from Octobers 137.9.  Finally in NZ, they have just announced an easing in their housing loan-to-value ratio, in a  sign that they feel the housing market has cooled enough for now.

Oil fell again to $51, a far cry from the October high above $76. We should not lose sight that Oil is probably the most important commodity in the world, supplying 40% of the worlds energy, hence the disruption to pricing inputs from erratic moves like this take a while to clear through. The world needs a smoother oil price…..