Morning Commentary: Tightrope

Foreign Exchange - Morning Commentary
Tightrope
Share this story:
Facebook
Twitter
LinkedIn
Email
Andrew Kositkun
Andrew Kositkun
Foreign Exchange Head Trader
This weekend, Taiwan heads to the polls for its general election.  For background, Taiwan finds itself in a unique position as it has many of the signs of statehood—a constitution, an army and a democratically elected government—but lacks universal acknowledgement of its independence.  The reason for this is that China still claims the island as part of its territory and resists any recognition of Taiwan’s independence.   

Back in 2016, President Tsai Ing-wen and her Democratic Progressive Party won the election in a landslide.  However, in 2018, her party suffered heavy defeats in local polls.  Since then, she has enjoyed a bounce in support that some attribute to China’s hardline response to the situation in Hong Kong and increased pressure on Taiwan.  During Tsai’s first term, China has launched regular patrols around the island and pressured global companies to recognize China’s claim. 

Against this backdrop, the Taiwanese situation is framed as a battle between pro-independence forces and those wanting unification with China.  However, the reality is that polling data consistently shows that most Taiwanese support maintaining the status quo of peaceful ambiguity.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
  • The US jobs report came in slightly under expectations, printing 145k against expectations for a 160k print.  Additionally, last month’s number was revised down to 256k from 266k.  This report caps a 10th straight year of payroll gains, the longest stretch of gains in the 80-year history of this data series.  The unemployment rate stayed at 3.5%, which is a 50-year low and wage growth disappointed, rising only 0.1% against expectations for a 0.3% gain, however last month’s wage gain was revised up to 0.3%.  This smaller than expected wage growth lines up with yesterday’s comments from Federal Reserve Vice Chair Clarida that the labor market isn’t putting excessive pressure on inflation.  Overall, while the headline number was technically a miss, the underlying labor market fundamentals remain solid. 
  • Canada’s jobs report significantly beat expectations, rising 35.2k against expectations for a 25.0k gain.  This represents a strong bounce back from last month’s disastrous number.  Additionally, the unemployment rate dropped to 5.6% from 5.9% last month. 
  • November retail sales in Australia beat estimates at 0.9% versus estimates for a 0.4% gain.  There was particular strength in discretionary.  This raises some risk of a large reversal in December as Christmas spending fell into the November number.
  • In the UK, the House of Commons passed the Withdrawal Agreement Bill which will now move to the Lords on Monday where it will also be passed.  The rest of 2020 will be focused on negotiating a free trade agreement with the EU.
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
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
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. City National 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 ©2020 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

Acquisitions or Alliances: What's Your Growth Strategy?