Risk aversion was the main theme for much of the session on Friday as concerns over the US-China trade tension escalation increased after Donald Trump said he will not meeting Chinese President Xi this month. Also not helping the cause is the fact that the US government could be headed for another shutdown, as political tensions flare up again between Congress and the President although negotiations to avoid a shutdown on February 15 are ongoing. Stocks initially headed lower but then bounced back late in the day and finished pretty much unchanged on the day after a tech-led rally in the final minutes of trading salvaged the session. The FX markets were generally sideways and most pairs finished close to where they started, the exception being the Aud$ which headed lower after the RBA dialled back on its growth outlook. The metals were slightly higher, while WTI also settled modestly higher on Friday but down almost 5% on the week. Note that US yields finished on a weak not (US10Y; 2.63%), which is likely to hamper any real US$ strength. Also of note, Iron Ore is still soaring in price – Friday closed at US$92.13 pt – which should at least give the $Aud some assistance.
Monday morning has seen US$Chf bolt out of the gates, in tripping stops above 1.0030, which saw the dollar climb quickly to 1.0098 before reversing equally fast back to parity, where it had started the day.
The coming week will see a fair bit of secondary data and Monday/Tuesday will be pretty quiet although the US will be busy in the 2nd half of the week. Inflation (CPI) figures will come from the UK, the US (Wed), (+PPI (Thur)), and China (Fri), while we will also get the first look at the EU Q4 GDP and the China Trade Balance for December, which will be closely monitored in light of the ongoing trade standoff between the US and China, and the US Retail Sales for December. The other main event of the week will be the RBNZ Meeting, at which no change is expected and the focus will lie in the wording of the statement and in the press conference.
Monday kicks off with the China New Loans, to be followed by the UK Industrial Production, Total Business Investment, Goods Trade Balance, NIESR GDP Estimate and December UK GDP. The German/EU ZEW Economic Sentiment Survey will be also released but that is about it, with no data due at all from the US.
Economic data highlights will include:
Mon: Japan Holiday, China New Loans, UK Industrial Production, Total Business Investment, Goods Trade Balance, NIESR GDP Estimate, GDP, German/EU ZEW Economic Sentiment Survey,
Tue: NZ Electronic Card Retail Sales, Australian Home Loans, NAB Business Conditions/Confidence, China Foreign Direct Investment, UK Manufacturing/Industrial Production, US NFIB Business Optimism Index, API Weekly Crude Oil Stock Inventory
Wed: RBNZ Meeting/Interest Rate Decision/Statement/Press Conference, Australian Consumer Confidence, China Trade Balance, UK CPI, PPI, RPI, EU Industrial Production, US CPI
Thur: NZ Food Price Index, Japan GDP, Australian Consumer Inflation Expectation, German Preliminary GDP, EU Unemployment, GDP, US PPI, Business Inventories
Fri: NZ Business PMI, NZ Visitor Arrivals, China CPI, PPI, Japan Capacity Utilisation, Industrial Production, EU Trade Balance, US New York State Empire Mfg Index, Import/Export Index, Industrial Production, Capacity Utilisation, Retail Sales, Michigan Consumer Sentiment Index
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