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Trumps Twitters Test a Troubled Market!

Published November 11, 2019

Author: Steven Oram

AUD gapped lower being confused as President Trump has struck at the heart of risk sensitive currencies, a tweet over the weekend claiming he hadn’t agreed to any tariff rollbacks. This sentiment undermined the work done on ‘phase one’ of trade negotiations between the U.S. and China, and this move was enough to send the Aussie (and other risk sensitive currencies) into a spiral. The Aussie opens lower across the board, with a sea of red on our rates table.

Trade talks will continue to play their part in the future for the Aussie, and the outlook here is unpredictable. If a phase one deal is struck, it would need to be before 15 December – the date at which President Trump has scheduled to raise tariffs on about $156 billion worth of Chinese imports.

There are a couple of crucial announcements for the AUD with Wage Prices and Unemployment data. Good employment numbers will see the AUD hang on to recent gains but equally any surprises and it will be quickly back to testing support again.

Reading into Fridays Statement of Monetary Policy from our central bank, the RBA is hoping a lower dollar will assist the economy, raising wages and lowering unemployment. The RBA saiys “a 5 per cent fall in the $A will help boost wages, push inflation into its target band and deliver higher economic growth sooner than currently forecast Markets”
Elsewhere this week……

Britain

British data will play second fiddle to Brexit developments, which now hinge on the general election taking place in just one-month time. That said, four tier-one data releases this week include GDP, CPI, Retail Sales and the Unemployment Rate. These will show us the impact of Brexit uncertainty so far.

U.S.

Three key releases this week include U.S. CPI on Thursday morning, with Retail Sales and Industrial Production due later in the week. All are forecast to show signs of weakness, largely a result of the trade war.

New Zealand

Its our neighbours turn to decide on Interest rates with the RBNZ Official Cash Rate decision and accompanying Monetary Policy Statement due Wednesday. The AUD has performed better than the NZD lately, and this has seen the AUD/NZD start to rally. Markets are torn about the decision, with interest rate futures and analysts showing uncertainty about which way the RBNZ will go.