Morning Commentary: A Leopard Can’t Change its Spots
A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
A Leopard Can’t Change its Spots
Share this story:
Alan Rose Foreign Exchange Head Trader
For the first time in many days, we arrive this morning with markets neither overly optimistic nor fearful that the sky is falling. This is the first day in many that global equities are not up or down by one to two percent causing ripple effects through all other asset classes. As we have all been witnessing, equities opening positive or negative has very little to do with the intraday direction or final closing as rapid changes in sentiment appear out of nowhere. For the time being, sentiment remains generally positive as China and the U.S.’s trade talks progress forward inch by inch.
Our title for today’s piece comes from the Old Testament. The meaning of that phrase implies that people cannot change who they are, no matter how hard they might try. The ECB left interest rates unchanged at 0.0% as expected and is in the process of halting its QE program that began four years ago this month.
ECB President Mario Draghi cannot help himself as his DNA is that of a perpetual dove. Despite ending the QE program, he felt compelled to offer continued caution about the EZ economy. He stated that the balance of risks remain to the downside and that significant stimulus is still needed to sustain inflation. The euro had moved higher overnight but soon lost all its momentum and is now lower on the session. The euro, like the U.S. dollar, continues to tread over the same turf despite all the turbulence in equities and interest rates. Continue to expect more of the same for now with currencies remaining generally range bound.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Turkey’s central bank left interest rates unchanged at 24% as expected.
Norway’s central bank left interest rates unchanged at 0.75% as expected.
Switzerland’s central bank also left interest rates unchanged at -0.75%. They too remained very dovish saying there is no reason to change policy currently and that the Swiss franc remains highly valued. They took the extra cautionary step by stating there is still room to cut interest rates further. The Swiss have had negative interest rates since December 2014.
Toronto new home prices fell at the fastest pace in more than two decades in October indicating that rising interest rates, expensive home prices, and tight mortgage lending are taking its toll. Home prices in Toronto fell by 1.4% in October from a year earlier which is the most since September 1996. Overall, Canadian home prices rose just 0.1%, the slowest rate of increase since 2010.
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