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Collinson FX: April 5, 2019 - US/China deal close

by Collinson FX 4 Apr 2019 21:20 PDT 2 April 2019

Collinson FX: April 5 2019 - US/China deal close

The Chinese/US Trade negotiations seem to be building to a crescendo. President Trump is expected to meet with the Chinese trade delegation and may announce a Summit to sign an agreement. Markets reacted positively to the long expected and much anticipated conclusion. This will be a big deal for the Global Growth scenario. There is talk of solutions to the complicated matters of capital flows in to China and the IP questions, which has been the major obstruction, now allowing a scheduled solution. The Challenger Jobs report was indicating private sector jobs cuts, but at a reduced rate from the previous month, leading in to what may be a soft Non Farm Payrolls number tonight.

The GBP slipped back to 1.3060, following a Parliamentary instruction to extend Brexit to the ‘never never’, almost. This process has been a complete train wreck and the leadership appalling. PM May must go and the UK must leave, to put an end to this debilitating chaos. The EUR also fell back to 1.1200, with EU markets equally frustrated and impacted by the destructive British politicians. The NZD traded around 0.6750, tentative and vulnerable to the US/China trade negotiations, while the AUD clings on to 0.7100. Politics in Australia will dominate local markets until the Federal election, except for major global economic events. The week will close with some positive trade news and the US will focus on the Non Farm Payrolls and Sentiment.

Collinson FX: April 3, 2019 - Oz budget delivers surplus 3rd April 2019 Market Commentary

The Australian Dollar lost ground overnight, after a huge day, including the RBA Rate decision and the Federal Budget delivery. The RBA left rates unchanged and confirmed strong economic conditions, including the labour market and public and private investment levels. Risks remain, in the form of household spending, driven lower by the housing market correction (referred to as an adjustment by the RBA!). The Dollar initially spiked but drifted back below 0.7100. The Budget is an ‘Election Budget’ with record spending, in the form of tax cuts and investment in infrastructure, education and health. The Budget did deliver a surplus and forecast surplus’s for the foreseeable future. This is a budget built on economic credibility and delivery. It was received well but the AUD continued to decline, trading back to 0.7050, while the NZD slipped to 0.6740.

European markets are still mired in Brexit chaos and the British Parliament again failed to adopt any pathway forward. The EUR is bouncing around on key technical lows, trading 1.1180, while the GBP gyrates around 1.3000. US and Chinese economic data has been strong and speculation of a trade deal remains positive. This has driven sentiment and markets. The Chinese negotiating team now return to Washington to close the deal. This will be a substantive and comprehensive deal, which will advance global growth prospects, but the devil is always in the detail. The massive re-balance of trade flows will impact existing suppliers to the Chinese market.

Collinson FX: April 2, 2019 - Budget night in Oz

Markets rallied strongly on the back of very positive Manufacturing data out of China and the USA. This combined with the latest completion of trade talks between global heavyweights, China and the USA. The two negotiating teams now head to Washington and look close to closing out a comprehensive deal. US Bond Yields bounced and the Dollar was steady. The EUR trades around 1.1200, while the GBP pushed back to 1.3120, mired in Brexit chaos.

The NZD held around 0.6800, while the AUD regained 0.7100, ahead of tonight's budget. The budget is the ultimate election budget, as it signals the beginning of the election campaign. The Government is set to announce the first budget surplus since the Howard/Costello Government, in an attempt to fight the election on it’s financial credibility. They are a long way behind in the polls and need a miracle. Labor will give them plenty of targets with their green credentials and higher taxes, but the Liberal/National coalition has proven inept and show little unity.

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