Market Overview:
Trade war, NAFTA and N.Korea all dominate the news.
Friday’s US Non-Farm Payroll figures were negative as the headline print of +103k came in way below the expected +188k, markets reacted accordingly dropping the US Dollar like a lead balloon and helping to raise currencies like GBP, EUR, AUD, CAD and the New Zealand Dollar (NZD). US Unemployment was also below par printing at 4.1% when 4.00 was expected. The Fed’s FOMC minutes Wednesday may read hawkish in line with the dot plot. Trade discussions have continued with the US government and China officials this week, with so many new requests by each party it’s hard to keep track of just who is winning the battle. President Trump tweeted: China will take down its trade barriers because it’s the right thing to do. Taxes will become reciprocal and a deal will be made on intellectual property. It’s clear the US Government wants to negotiate. Over the weekend Steven Mnuchin acknowledged the potential for a trade war but at the same time said he wasn’t expecting it to happen. As things progress it’s evident that the US has the most to lose as President Trump continues to put pressure on China with tariff threats, China has a potential route out of the trade conflict that would be extremely detrimental to both countries as they have an option to open new trade connections to Asia, Africa, and Europe. Plans are surfacing that China could possibly devalue the Yuan as a weapon in the current trade war. China’s president Xi has announced plans to further open up the Chinese economy by significantly lowering tariffs for autos and other products. Xi’s address was seen as positive for markets with him saying China does not seek a trade surplus and has a desire to increase imports. Markets turned to favour risk and the New Zealand Dollar (NZD) and other risk products are significantly bullish late Tuesday. Read more