August 19, 2019
Equities markets edged higher on Friday. The S&P closed 1.4% higher and has started to reclaim recent losses with the news that US-China trade talks are progressing.
Key economic releases from across the globe this week include: Australia: Monetary Policy Meeting Minutes, CB Leading Index and Flash Manufacturing PMI; US FOMC Member Quarles Speaks, Unemployment Claims, Flash Manufacturing PMI, FOMC Meeting Minutes and Existing Home Sales; UK Public Sector Net Borrowing, CBI Industrial Order Expectations and CBI Realized Sales; Eurozone: Eurozone Current Account, Final Core CPI, German PPI, ECB Monetary Policy Meeting, Consumer Confidence and German Flash Manufacturing PMI; Rest of the World: New Zealand PPI Input / Output (Quarterly Figure); Japanese Trade Balance; Canadian Manufacturing Sales; Russian Unemployment Rate and Retail Sales; Chile GDP.
Iron ore moved one percent higher on Friday and lifted the commodity linked Aussie dollar. Gains were slight but it was still a move in the right direction for AUD which appears to be trading within a tight range against the US dollar. News through the wires suggested that US-China trade talks are progressing in the right direction which has also lifted the Aussie from its worst one-day performance recorded last Wednesday. Data out this week from Australia is limited but markets await the RBA minutes on Tuesday which may give clues as to future interest rate decisions.
Following positive Retail Sales out of the US on Friday the dollar index moved to one-month highs. Flight to safety is also helping the US dollar as global tensions persist with the protests in Hong Kong having potential to impact the US-China trade war. Analysts still predict a rate cut from the Fed before the close of this year with Reuters posting a 56 % chance of a 25 basis-point cut in September. It’s an important week in terms of data out of the US with key releases in the form of Unemployment Claims, Flash Manufacturing PMI, Existing Home Sales and FOMC Member Quarles Speaking on Wednesday. FOMC Meeting Minutes will be released this Thursday and the Jackson Hole Symposium is also scheduled for this weekend. This event is a big draw for Central bankers and this year’s theme will be focused on ‘The Challenges of Monetary Policy.’
GBP was the best performing currency last week moving from the 1.21 level to 1.2175 against the US dollar. Better than expected Retail Sales numbers from the UK lifted the Pound with a return to a data driven market. Of late, politics have dominated headlines and have been the main mover of Sterling. It’s light in terms of data out of the UK this week with the headline figure being Public Sector Net Borrowing late on Wednesday AEST.
The German government are considering ramping up their debt to boost growth. ECB Central banker Olli Rehn commented that the ECB is preparing a “very strong package” relating to easing measures. This has raised expectation of a further 12 months of QE and for the ECB to take significant action when they meet in September concerning interest rates. AUD gained 0.3% against the Euro last week finishing at the highest level in three weeks. Key data out of Europe this week will be the Eurozone Current Account, Final Core CPI, the ECB Monetary Policy Meeting and Consumer Confidence. All releases that have the potential to move AUD/EUR.
Rest of the World
30-year UK government and US government bonds fell on Friday as investors were gripped by risk-off sentiment driving them to safe-havens. Bond yields fell below 1% and 2% respectively which was the first time this has occurred since records began. China has reduced its cost of business by 1% in a further attempt to support its economy.
NZD – PPI
JPY – Trade Balance
EUR – Eurozone Current Account
EUR – Final Core CPI
AUD – Monetary Policy Meeting Minutes
EUR – German PPI
CAD – Manufacturing Sales
AUD – CB Leading Index
AUD – MI Leading Index
NZD – GDT Price Index
NZD – Credit Card Spending y/y
GBP – Public Sector Net Borrowing
USD – FOMC Member Quarles Speaks
CAD – CPI
AUD – Flash Manufacturing PMI
CAD – Wholesale Sales
USD – Unemployment Claims
USD – Flash Manufacturing PMI
USD – FOMC Meeting Minutes
USD – Existing Home Sales
EUR – ECB Monetary Policy Meeting Accounts
EUR – German Flash Manufacturing PMI
NZD – Retail Sales
EUR – Consumer Confidence
CAD – Core Retail Sales