Morning Commentary: Certainly Uncertain

Foreign Exchange - Morning Commentary

Certainly Uncertain

Share this story:
Facebook
Twitter
LinkedIn
Email
Andrew Kositkun
Andrew Kositkun
Foreign Exchange Head Trader
U.S. markets returned from its long holiday weekend to find a risk off tone characterizing the markets.  Equity markets in Asia have closed broadly lower and both European and U.S. markets are currently in the red. 
 
The outlook for global growth took another hit with the IMF downgrading its global forecasts again.  While the majority of the downgrade circled around Europe (see Germany and Italy), the latest Chinese GDP data showed its economy growing at its slowest annual pace since 1990. 
 
The trade conflict with the US is often cited as a key headwind to the Chinese economy, and rightfully so, it is important to remember that the Chinese economy was slowing before the trade rhetoric picked up. 
 
As a result of this slowdown in growth, President Xi issued a warning to top officials and additional stimulus from China is expected.  However the tools available to authorities is less deep than during previous downturns, which could explain why President Xi focused on the need to stabilize rather than stimulate the economy when he spoke of his areas of focus. 
 
In the U.K. PM May put forward her Plan B for Brexit that looks very much like her Plan A that has already failed by a historic margin.  However, from an economic perspective, there is a silver lining to the process as the opposition put forward a series of amendments that reduces the chances of a no deal Brexit.  Additionally it has been reported that Brexiteers are becoming increasingly open to the possibility of a delay or a second referendum which has helped the GBP rally.  
 
Finally, in the U.S., the government shutdown heads into Day 32 with no signs of an end despite ~800,000 government workers set to miss a second paycheck.  Over the weekend, the number of TSA agents that took unscheduled absences more than tripled from a year ago.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
  • UK labor data came in better than expected with average weekly earnings up 3.4% against expectations for a 3.3% increase.  This is the strongest wage growth in over a decade.   
  • It has been reported that the US will formally request the extradition of Huawei's Meng Wanzhou, adding another complication to the US-China trade talks.   
  • As a reminder, the Bank of Japan meets tonight.  With data disappointing recently, a reiteration of BoJ officials' commitment to stimulus is expected. Currently markets are pricing in a greater chance of a rate cut than a rate hike this year. 
If we can help you with any Foreign Exchange needs, please email foreignexchange@cnb.com or call (800) 447‑4133.
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:
Facebook Twitter LinkedIn Google Plus YouTube
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.
Unsubscribe from this list  |  Update email preferences
This message has been sent to bank@banking.offers.report. Please do not reply to this email. To ensure the delivery of future emails, please add foreignexchange@emails.cnb.com to your email address book or safe sender list.
Copyright ©2019 City National Bank – All Rights Reserved.
350 South Grand Avenue, 12th Floor, Los Angeles, CA 90071
City National Bank is a subsidiary of Royal Bank of Canada.
TERMS & CONDITIONS  |  PRIVACY STATEMENT
Equal Housing Lender
NMLSR ID# 536994 | City National Bank Member FDIC
                                                           

Comments

Popular posts from this blog

Are tax hikes coming?