All eyes on Argentina; US/China Trade Tensions dominate broader direction

Key Movers

The New Zealand Dollar traded within a 50-pip range on Thursday moving between a low of 0.6838 and a high of 0.6884, the NZD/USD pair was capped by the release of ANZ Business confidence which showed that confidence was unchanged in November from October with a net 37.1% of businesses expecting conditions to deteriorate, suggesting that businesses remain pessimistic about the outlook.



Overnight the FOMC minutes reinforced a strong chance of a rate hike next month which markets have now been pricing in for sometime now.



The local macroeconomic calendar is light today with only NZ Building Consents due, attention turn to the G20 summit in Buenos Aires


The Great British pound fell back through 1.28 through trade on Friday, testing near two week lows as investors concerns surrounding next months vote on May’s proposed Brexit agreement escalate. Having reached an accord with EU negotiators May’s focus now turns inward in trying to garner the support needed within her own conservative coalition and UK parliament to force a “Yes” vote and agreement to proceed with the recently parleyed exit strategy. Early signs suggest disgruntled Brexitiers will vote down the proposed exit strategy forcing the plan to a 2nd vote and possibly prompting a snap election or vote of no confidence in the incumbent May. While markets have largely priced in a “no vote” a snap election in its wake posses a significant risk event for the GBP moving forward.


With little of note on the domestic docket today attentions remain squarely affixed to ongoing headline risk. We anticipate the GBP will remain range bound through the short term struggling on moves approaching 1.30 ahead of the December 10 Brexit vote.


The US Dollar index which measures the greenback’s strength against a trade-weighted basket of six major currencies moved within a fairly tight range on Thursday. Following its dramatic drop in the session prior the DXY moved between levels of 96.63 and 97.01. Macroeconomic releases yesterday didn’t help either with US Core PCE Price Index coming in below expectations for the month of October as well as an unexpected rise in unemployment claims.



Us equities trading up, the Dow Jones up around 0.20% to 25,417.75 while the NASDAQ climbed 0.18 percent to 7,304.95. On the commodity front, oil was up at $52.00 a barrel but the metals – gold, silver and copper all lost ground.



Looking ahead, FOMC member William will be speaking at the 80th Plenary Meeting of the Group of Thirty, in New York and we also see the release of Chicago PMI.


The Euro held onto midweek gains on Thursday having bounced back through 1.1300 in the wake of the US Federal Reserves apparent shift in monetary policy guidance. The 19-nation combined unit pushed through 1.1350 to touch intraday highs at 1.1389 but struggled to extend the upside move through resistance at 1.14/1.1450.


The Euro has been plagued by ongoing softness across key growth indicators and increasing concerns the ECB will be forced to forego plans to end monetary stimulus next month and extend its period of accommodative interest rates beyond the summer of 2019. Persistent Italian debt and fiscal concerns, coupled with ongoing Brexit uncertainty have weighed on the single currency, forcing markets toward high yield returns and the USD.


Attentions now turn to Inflation estimates as the primary or headline data event amid a raft of middling data points while the weekends G20 summit possess as an important driver in medium term direction. A resolution to recent US/China trade hostilities could help support the embattled Euro plagued by persistent rumours tariffs will be extended to include European automakers. A détente between Premier Xi and President Trump could prompt a move back through 1.14.


The Canadian Dollar trended sideways through trade on Thursday bouncing between 0.7520 and 0.7550 as markets sit back, poised to react to trade talks between President Trump and Premier Xi. The Canadian dollar has suffered a month long depreciation on the back of recent depreciation in Oil prices and ongoing trade hostilities touching 15 month lows prior to Wednesday’s shift in Fed monetary policy.



With little of note on the domestic economic calendar attentions remain focused on this weekend G20 summit. An end to US/China trade hostilities could prompt renewed support for the Loonie and a break back toward 0.76/0.77.