Not much movement overnight except in AUD and NZD. AUD was hit with two blows, a real one and a paper one. The real one was that custom officers in China’s northern port of Dalian have reportedly banned imports of coal from Australia indefinitely. There are now five ports in that area that won’t permit Australian coal through customs.
PM May and EU Juncker consider the Brexit talks constructive. EU Tusk stated that a delay would be wiser than no-deal. Wall Street ceased calmly following the Fed's Minutes release, with the S&P performing slightly well. Asia's market featured a mixed sentiment with the Nikkei rising 0.15%. Westpac forecasts that the Reserve Bank of Australia will cut rates in August
GBP took center stage as PM May’s spokesman said that a meeting today between May and EC President Juncker would be a “significant” part of her plan to break the deadlock over the Irish border. There is talk that there will be a new draft agreement on the border ready by tomorrow. That’s what the British say. Juncker says he’s not expecting major developments.
An odd day – not the usual “risk on” or “risk off,” as both the commodity currencies and the safe-haven currencies weakened vs USD. Moreover, the commodity currencies weakened more, even though US stocks were up sharply and Asian stocks are by and large slightly higher this morning, too.
GBPUSD opened at 1.2900 and appreciated until 1.2940 during the early morning hours after President Trump's comment that the trade between the UK and the US will substantially rise after the Brexit. Wall street closed high despite some weak data, with the S&P escalating over 1% and Dow rising 1.7%.
There’s a definite “risk on” mood in the markets this morning on optimism over the US-China trade talks. US stocks closed higher Friday (S&P 500 +1.1%) and most Asian markets are up solidly this morning, except India. Trump said last week’s China trade talks were “very productive” and were making “big progress.”
The big move over the last week has been the surprise rally in NZD. This occurred entirely after the Reserve Bank of New Zealand (RBNZ) meeting, which apparently was deemed more hawkish than expected. The RBNZ retained their neutral bias and said that “The direction of our next OCR move could be up or down,” which is effectively what they said back in November.
A really volatile day yesterday! Definitely “risk off” as JPY and CHF were the best performing currencies and AUD was the worst. The big event was yesterday’s collapse in US retail sales in January. Headline sales fell 1.2% mom, the largest drop in nine years. This compares with an expected +0.1% rise. Excluding autos, sales plunged an even steeper 1.8%, the worst drop since 2008 (expectations were for it to be unchanged).
Gold and Silver prices are moving slightly higher by +0.05% at $1.306/oz and +0.30% at $15.58/oz respectively recovering part of the yesterday big losses during the US trading session mainly due to the improvement in risk appetite after the positive tone on the trade talks in Beijing between US and China, the US Congress deal to avoid another shutdown and the strength in the US dollar.
Interesting action overnight – AUD and CHF both up, NZD, CAD and JPY all down. So we can’t really say it’s “risk on” or “risk off.” USD up and EUR down, which tends to indication risk on nowadays. US stocks closed modestly higher but Asian stocks are mixed, suggesting that the overall risk picture is neither here nor there.
Amazing movement in NZD! Reading the Reserve Bank of New Zealand (RBNZ) statement, I’m hard pressed to understand why. The RBNZ retained their neutral bias and said that “The direction of our next OCR move could be up or down,” which is effectively what they said back in November.
Good news all around in the US! It seems that US congressional negotiators have agreed on the spending bills necessary to keep the government open past Friday’s deadline. The agreement includes some money for fencing on the border with Mexico, but much less than Trump wants and nothing that could be called a “wall.” It’s not certain that Trump will go along with the deal, but markets seem to think it’s likely that he will.