Collinson FX: February 27, 2019

Collinson FX: February 27, 2019 - Kiwi pushes up

by Collinson FX 26 Feb 2019 12:52 PST 27 February 2019

Collinson FX: February 27, 2019 - Kiwi pushes up

Markets were dominated overnight by the testimony of the Federal Reserve Chairman Powell. Powell testified that US economic conditions were ‘generally favourable’ but that dangers were brewing. He cited the main dangers are from external sources, namely China and Europe, who are suffering a major economic downturn. Domestic dangers were listed as low inflation, productivity and public debt unsustainability. He vaunted the strong labour market and improving wage growth. Powell described monetary policy as ‘patience’ and suggested the current balance sheet unwind could be adjusted if necessary. US Housing Starts contracted, but Building Permits improved, as did House Prices. The Dollar settled with the news, as the EUR approached 1.1400, while the Yen went to 110.70.

The GBP spiked to 1.3250, as Brexit chaos continues to unfold, with PM May now conceding an extension to the Brexit deadline is possible. The US/China Trade negotiations are proceeding nicely, while President Trump meets North Korean leader Kim, in Vietnam. Trump is completely changing the face of the Asian continent and the China/US agreement is an integral part of this process. The AUD trades 0.7170, while the NZD pushes up to 0.6880, supported by the global growth prospects. The caveat would be the massive increase in competitive US exports to China.

NZ Trade numbers may be an insight into the current situation, which is being threatened by China and would be a signal if there were any substantial contraction in Exports?

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