Both the US dollar and bond yields weakened quite markedly on Friday during the US session after some unexpectedly cautious comments on the global growth outlook from various Fed speakers Clarida, Kaplan, Kashkari and Evans and helped along by the POTUS Twitter account, which announced that a trade deal with China is looking more of a prospect than previously had been the case. The White House, however, later issued a more cautious on this in telling CNBC that a deal is unlikely to be arrived at in the near future. The dollar suffered on all fronts with the 10Y falling to a 2 week low of 3.06% and looking as if a test of 3.00% may be on the cards in the days ahead. All the major currencies performed strongly, in particular, the Aud and Kiwi, which liked the POTUS Tweet on the US/China trade negotiations. Sterling climbed off its lows, but that may be temporary if the UK Parliament fails to endorse Theresa May’s Brexit plan; we shall see.
In other markets, the metals liked the softer US$ and rose by around 0.8%, while WTI was up by about 0.5%.
US stocks ended the day mixed (DJI+0.5%, S+P +0.2%, Nasdaq -0.15%) but down, overall, on the week.
The coming week is relatively thin for data and do it will be political headlines that mostly dominate the action. Conditions will also be thin later in the week with the US out for the Thanksgiving Day holiday on Thursday. There are, however, several points of note, including the RBA (Tue) and ECB minutes (Thur) will catch some attention. Also due are the BOJ Monetary Policy Statement (Tue), the EU decision on the Italian Budget proposals and the US Durable Goods Orders (Wed) and the EU/US Flash PMIs (Fri). The main focus will remain on UK politics, the Italian budget, US-China trade talks and the tone of what the various Fed speakers have to say. Have a good week.
Economic data highlights will include:
Mon: NZ PPI, Japan Merchandise Trade Balance, EuroGroup Meeting, EU Current Account, Construction Output, EU Financial Stability Report, BuBa Monthly Report, US NAHB Housing Market Index
Tue: RBA Minutes, NZ Credit card Spending, BOJ Meeting/Statement, German PPI, UK Autumn Forecast Statement, Global Dairy Trade Index , CBI Distributive Trends Survey – Orders, US Housing Starts, Building Permits, API Weekly Crude Oil Stock Inventory
Wed: WBC Leading Economic Index, EU decision on Italy, EU Non-Monetary Policy Meeting, UK Public Sector Net Borrowing Requirements, US Durable Goods Orders, Existing Home Sales, Michigan Consumer Sentiment Index, EIA Crude Oil Stocks Weekly Change
Thur: US Thanksgiving Day, NZ Visitor Arrivals, Japan CPI, UK Inflation Report Hearing, ECB Minutes, EU Consumer Confidence, US Jobless Claims
Fri: German GDP, EU/US Flash PMIs
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