How Brexit , NAFTA, and US-China move the Markets

Weekly Report - 24/09/2018

How Bexit , NAFTA,and US-China move the Markets


With the EU kicking the British PM’s proposals, and without any other options given, things are not that optimistic anymore, but on the other hand, things are more negative for Brexit. Nothing else will be in focus this week as Brexit is the key driver for the GBP. Now with the coming week’s Tory party conference we will probably see the British PM and the Pound going under the collar. As for the NAFTA Talks, no real progress from last week and talks are going to continue, though some debate whether the U.S has any interest in wrapping things up. What we probably expect is some more pressure on the Loonie. On the other important news About US-China trade was, tariffs are all over the place and Chinese Administration has been quiet. The hopes of the Republicans losing both houses may be more on the wishful thinking side than tactical. Trump’s latest tariffs will be out on Monday.

The Week that was

Through the Asian session last Monday morning there were no actually important material stats released in order to set a direction. Asian markets had a great opportunity to react to Trump’s late Friday continued call for tariffs on the additional $200bn worth of Chinese goods.

In response to Trump’s latest comments, the U.S equity markets went up, although it was a mixed bag through the early part of the day. The scheduled release of the RBA meeting minutes on Tuesday gave some support at the start of the day, the Aussie Dollar went up about 0.04% to $0.7150, as for now a minor gain due to the concern that China may eventually reject the olive branch from the U.S following Trump’s push for additional tariffs. The Aussie Dollar got support from the last RBA Rate Statement earlier in the month, and that grew the expectations of a more hawkish RBA, though there are plenty of reasons to consider that could temper any AUD/USD rally.


Main Focus This Week

The main event this week is Wednesday’s monetary policy decision for the U.S. Dollar. A rate hike is the main expectation and, while the December rate hike is about at 80% according to the FED Funds Futures the main focus will probably be on the economic forecasts and median forecast for rate hikes through 2019. Now, there is a likelihood of a March rate hike and the chance for that is at 50%. If there’s a result to the U.S – China trade war we may expect that to spike. The result is not based only on the trade war, talks about the economy are pruning out another reason to think in the reports and statements. As for the Kiwi Dollar, Thursday’s interest rate decision probably will not deliver a surprise, whilst better than expected economic data of late could see the RBNZ shift from its dovish tones to provide the Kiwi an added boost.


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