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Australia

We should get plenty of movement this week in the Australian Dollar with a reasonably well booked economic docket. Building Approvals and Retail Sales will feature along with the main event, the Reserve Bank cash Rate and Monetary Policy Statement today at 5.30pm NZT. The RBA over the past fortnight would have been looking hard at the prospects of cutting today based on rather disappointing recent data highlighted by poor overall employment numbers. A cut is almost widely predicted with most Australian Banks bringing forward their cut forecasts, the NAB see a rate cut today and at the December meeting which would bring the benchmark rate down a historic 0.5%. CBA also have 25 point cut priced in for today. Rate cut rhetoric should keep spikes in the Aussie Dollar contained with continued easing bias dominating overall momentum to the downside.  

New Zealand

The New Zealand Dollar turned in the best weekly performance against its peers despite a choppy and mostly directionless market. Against the British Pound the kiwi was up over 2.0%. The Reserve Bank of New Zealand left the official cash rate unchanged at 1.0% but indicated that further cuts remain likely. Adrian Orr’s report was not as dovish as we were anticipating with the RBNZ expecting upcoming NZ data to firm up the need to hopefully not make a further cut. The Reserve Bank of New Zealand Annual report published Monday, Adrian Orr saying the New Zealand economy has been resilient through a period of weakening global growth and heightened global uncertainty. “Throughout the year our priorities focused on setting the foundations of significant change and setting us up for growth and innovation.” ANZ Business Confidence showed an 11-month low in September of -53.5 form the previous -52.0 and immediately put the NZD under pressure.

United States

US Core Durable Goods Orders for the month of August came in at 0.5%, up from the 0.2% markets were anticipating. The data, which is the total value of all purchase orders placed with US Manufacturers increased largely based on increases of military items with most demand down in other industrial sectors. US personal spending increased by 0.1% in August down on the 0.3% forecast following a rise of 0.6 for the month of July, softer discretional spending was the reason for the drop but with continued growth in consumer incomes there still remains scope for further economic expansion. Reports surfaced Friday suggested the Trump administration was discussing ways to limit US investors portfolio flows into China. This corresponded with sell offs in equities and created fresh risk off sentiment. This can only be bad for trade talks leading into next week’s scheduled talks. US Monthly Non-Farm Payroll for September publishes Friday with a further 130,000 people expected to be added to the US labour force after August’s 130,000.     

United Kingdom

The British Pound sank to fresh three week lows against the greenback last week giving back recent week’s gains. There are calls for Prime Minister Boris Johnson to resign following the Supreme Court decision against him when he unlawfully prorogued parliament. This has reduced chances of the UK leaving the European Union without a Brexit deal. Jeremy Corbyn said he would call for a no confidence vote – sound familiar! – only after the risk to a no deal Brexit is removed. Johnson said he had no problem with the vote taking place but said he would not resign if he lost. He is also calling for a general election but at the moment the opposition wont grant this to him until to requests a Brexit extension past the 31 October deadline. He has by law until the 18th of October to request an extension with Brussels if a deal has not already been agreed by this date. The EU has repeatedly said the latest Irish backstop proposals are unsatisfactory. We can expect a week of GBP volatility with Johnson planning to table fresh ideas. UK current Account came in at -258.2B down from the -19.2B expected keeping the GBP under pressure across the board.   

Europe

The Euro struggled against all but the GBP last week dropping lower to 1.0900 Friday amid general greenback demand. This week we expect it to rise back towards 1.1000 as market repositioning takes place ahead of Friday’s Non-Farm Payroll release. A quiet week of data with only German monthly CPI and a German holiday Thursday should ensure the Euro gets its directional cues from offshore headlines. The Euro faces the threat of deteriorating further over the remainder of 2019 as risks the European Central Bank (ECB) runs out of tools to insure against a depreciating Euro and large QE package.

Japan

The Japanese Yen may get a boost from the safe haven investors this week, as we see another bout of nervousness and uncertainty in the markets on the cards. The Bank of Japan was on the wires saying they must maintain their current powerful monetary policy until price goals are sustained. Kuroda said the central bank would carry out policy without preconceptions. Industrial Production printed yesterday at -1.2% based on predictions of -0.5% showing the global slowdown is clearly making its presence felt. Retail Sales released up 2.0% for August month the strongest reading since March 2014. The spending was spread across all sectors which will no doubt give the BoJ something to cheer about. Japanese unemployment published at 2.3% earlier today.     

Canada

Crude Oil inventories have gradually picked up over the past couple of weeks assisting to put pressure on the Canadian Dollar. Crude Oil price continues to consolidate around the mid to high 50’s on the back of the Saudi Oil attacks a fortnight ago. With the China-US trade war back in focus over the next few days and the shock of the Crude oil attacks on markets still raw, we see difficult trading conditions ahead for the Loonie as tensions in the Middle East have the power to derail Iran oil sanctions. On the Calendar we have monthly GDP and Trade Balance to focus on this week.  

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