Market Overview

Worldwide coronavirus cases surpass 65.29 million with over 1,507,000 official deaths.

Broad based United States dollar (USD) weakness has been the overriding theme in the FX market over the past week. It has really been a continuation of a trend that started in the wake of the US election and it’s showing no signs of abating yet. Economic data from the US has been somewhat mixed in recent days, but stock markets have been driven higher by prospects of a potential agreement in US stimulus talks. The Democrats and Republicans are getting closer to an agreement and President Trump has said he will support a stimulus bill if congress can agree one. Both the New Zealand dollar (NZD) and Australian dollar (AUD) reached their highest levels since mid-2018 against the greenback overnight at 0.7104 and 0.7449 respectively. 

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Market Overview

Worldwide coronavirus cases surpass 61.22 million with over 1,435,000 official deaths.

The New Zealand Dollar grew 5.8% last week against other major currencies moving into top dog for the strongest currency in the main group. Solid local economic data pushed the kiwi up to levels we haven’t seen in some time.  Rising 1.6% against the Japanese Yen from around 72.00 levels to 73.10. Monday’s Retail Sales shattered records bouncing by a whopping 28% recovering from -14.0% in the second quarter when strict lockdown measures crippled spending. In a weird letter to Reserve Bank governor Orr, Finance Minister Robertson asked to rectify soaring house prices by including housing in its mandate. Orr’s reply was broadly based on housing already priced into their models such as CPI. The kiwi loved the news climbing to fresh highs.

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Direct FX

FX News

Worldwide coronavirus cases surpass 61.22 million with over 1,435,000 official deaths.

Key Points:

  • AstraZeneca has come under scrutiny after word got out that only partial doses were administered, clearly holding back crucial information which eroded confidence.
  • NZ Retail Sales came in a staggering 28% in the third quarter compared to -14% in the second quarter highlighting a bounce in local spending. 
  • US coronavirus cases and deaths are on the rise amid US Thanksgiving holiday as millions of people defied official travel advice to not gather. 
  • EU and UK Brexit talks are expected to resume with face to face discussions with EU officials preparing to travel to London.
  • US unemployment claims for last week jumped to 778,000 from 742,000 with an increase to unemployment.  
  • From 12 October China has banned Australian imported coal with over 80 ships now sitting off ports in China waiting for clearance.

US Manufacturing drives up the USD

Worldwide coronavirus cases surpass 59.47 million with over 1,401,000 official deaths.

As we approach 2021 we are still seeing muted economic activity which is below levels seen prior to the outbreak of the coronavirus pandemic. The severe lack of offshore visitors and tourists has undermined a strong recovery domestically.  As the massive monetary policy stimulus in the form of quantitative easing becomes no longer needed the decision of repayment will have to be weighed up. It’s clear that any strong momentum in the economy will be closely tied to coronavirus. However, many tourism related sectors are recovering at a faster pace than expected post lockdowns. The building industry is showing strong demand as well as manufacturing and recent spikes in Retail Sales. Retail Sales jumped 28.0% yesterday for the third quarter after 20% was predicted, a massive rise from second quarters -14.6% performance.

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Economic Releases

Monday 23/11

  • All Day, JPY, Bank Holiday
  • 915pm, EUR, French Flash Services PMI
    • Forecast 39.2
    • Previous 46.5
  • 930pm, EUR, German Flash Manufacturing PMI
    • Forecast 56
    • Previous 58.2
  • 930pm, EUR, German Flash Services PMI
    • Forecast 46.1
    • Previous 49.5
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International Trade

FX Update

Worldwide coronavirus cases surpass 57.2 million with over 1,364,000 official deaths.

        Key Points:

  • Australian Unemployment rose from 6.9% in September to 7.0% in October
  • The RBNZ Wednesday acknowledged less justification for interest rates to be lowered. We see rates being cut in May 2021 to 0.10%
  • US coronavirus daily numbers are continuing to get bigger with 165,000 new cases yesterday and 164,000 Wednesday with a total number of just over 3M Americans now with the virus. Alarmingly over 1.15M have been diagnosed in the past 7 days. 
  • President Trump’s legal claim regarding ballot counting in the state of Wisconsin started Wednesday with Elections Commission officials agreeing to recount ballots in Milwaukee and Dane counties.
  • Moderna boost risk markets after their vaccine trials report 94.5% effectiveness.
  • UK’s Frost has informed Prime Minister Johnson to expect a Brexit deal early next week.

Vaccine Optimism Boosts Risk

Worldwide coronavirus cases surpass 55.19 million with over 1,330,000 official deaths.

Key Points:
• Biden and the Democrats oppose a new 4-6 week nationwide lockdown proposal by newly elected advisory board
• The RBNZ was less dovish than we expected, acknowledging less justification for interest rates to be lowered. We see rates being cut in May 2021 to 0.10%
• US coronavirus numbers over the last 10 days are averaging over 150,000 cases per day with hospitals at capacity.
• President Trump has made legal claims on the legitimacy of the ballot counts in at least 4 states, his legal claim in Georgia is underway with an official recount.
• Moderna boost risk markets after their vaccine trials report 94.5% effectiveness.
• UK’s Frost has informed Prime Minister Johnson to expect a Brexit deal early next week.

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Economic Releases

Monday 16/11

  • 940pm, AUD, RBA Gov Lowe Speaks
  • 10pm, EUR, ECB Financial Stability Review

Tuesday 17/11

  • 2am, EUR, ECB President Lagarde Speaks
  • 1130am, AUD, RBA Assist Gov Kent Speaks
  • 130pm, AUD, Monetary Policy Meeting Minutes
  • Tentative, All, OPEC-JMMC Meetings
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FX News

FX NEWS

Worldwide coronavirus cases surpass 52.95 million with over 1,296,000 official deaths. 

Trump has refused to concede defeat just yet in the 2020 US Election preferring to kick off a large-scale litigation process in efforts to reverse vote counts in several key states. The first state to have its voter count fully audited is Georgia. Georgia’s secretary of state announced on Wednesday that the state would conduct a full audit of the US Election voter result by doing a full recount by hand of the millions of ballots cast. The margin is so close in the state which Biden is holding by around 12,000 votes majority. Democrats say there is no actual evidence of widespread fraud in the election as no state or county has reported any inaccuracy of the vote count specifically. The legal process and any likely outcome will take weeks, possibly months to be made official. 

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