A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Share this story:
Alan Rose Foreign Exchange Head Trader
Equity markets are closing the week on a weak note once again as weak and disappointing data from China and the EZ have sent global equities indices to lower levels. The weak equity performance is rippling through interest rates, commodity prices, and sending the U.S. dollar index (DXY) to much higher levels against all the majors and emerging market currencies. The one exception is the Japanese yen.
Weak and disappointing economic data from China and the EZ are at the source of the anxiety about data that continues to point towards a global economic slowdown while the U.S. economy continues to remain buoyant (see retail sales below). Chinese retail sales for November posted their worst performance since May 2003 and industrial production declined to 5.4% annually. Equally disappointing was the December EZ PMI which dropped to 51.3 from 52.7; that is the lowest level in more than four years. French data was particularly weak at 49.3 which is below the key 50.0 level that indicates a contracting economy.
The DXY index is near to its best level of the year today. The strong U.S. dollar, the U.S. trade deficit, and a weakening global economy will only add to headwinds for the U.S. economy going forward and complicate the Fed’s decision for next week. U.S. exceptionalism regarding growth above its peer group continues to provide the back drop for the Fed to raise interest rates for the ninth time next week. The Fed will need to use all its magical powers to thread the needle through actions and language and strike the right balance so the markets do not go through a continuing melt down.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
The Russian central bank unexpectedly raised interest rates by 25 bps to 7.75% this morning. The rate increase is seen as supporting the weakening Russian ruble and inflation data that is approaching the upper limit of 4.0%.
U.S. economic data continues to remain very resilient. Retail sales for November came slightly above expectations at 0.2% and October was revised higher from 0.8% to 1.1%. The “control group” number within the general number was particularly strong at 0.9% against estimates of a gain of 0.4%. Industrial production for November was also strong at 0.6% against consensus estimates of a gain of 0.3%. U.S. interest rates are lower on the session reflecting equity weakness.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Investment and Insurance Products:
Are Not insured by the FDIC or any other federal government agency
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Now accepting scholarship apps Celebrating 40 years of service -- A loan to an innovative company -- Affording your dream home -- Mergers and a new branch in Raleigh View this email in your browser Forward to a friend
Your Market News update for May 30, 2019 | View online Market News News that's moving the market now As Trade-War Worries Linger, Market Seems to Lack Buying Conviction May 30, 2019 8:40 AM | JJ Kinahan 6 min read | Daily Market Update