Morning Commentary: Just Under the Surface

Foreign Exchange - Morning Commentary

Just Under the Surface

Share this story:
Alan Rose
Alan Rose
Foreign Exchange Senior Trader
Global equity markets remain generally upbeat, optimistic, and hopeful that the U.S.-China trade talks will have a positive and successful conclusion. Adding to the optimism of global equity markets have been a pivot by the Federal Reserve to the dovish side and building confidence that the Brexit negotiations will also result in a soft Brexit and do minimal harm to both the U.K. economy and the EZ. This change in tone and attitude in the equity markets occurred almost overnight in late December after December’s near panic selling by global investors as they were filled with angst and anxiety about future growth.
While global equities have garnered the most attention and have been the visible sign of this most recent shift in sentiment, G7 interest rates have badly lagged behind as concerns linger about future growth, earnings and a more dovish Fed. While not a key focus of our commentary and not getting a lot of front page coverage, basic raw material prices have overlaid and correlated with the positive shift in U.S. and global equities. Iron ore, copper, oil, gold etc. have all been surging since the beginning of the year anywhere from 10% to 20% on the expectation that the worst is behind us now.
Markets are always looking forward and investors remain hopeful that the worst of the trade wars and disputes are behind us as it has taken a toll on many major economies with many near recessionary levels. A return to normalcy in terms of supply chains and expectations is a key for business planning and investment. I am hopeful that the equity markets are reading the tea leaves correctly and that demand for raw materials reflects this optimism.
  • German economic data continues to reflect weakness and a loss of momentum and confidence. Germany barely escaped having two quarters of negative growth in Q3 and Q4 last year. Today’s German IFO business confidence survey was disappointing again as it came in at 98.5 which was below consensus estimates. This is the lowest reading in five years, but it was not a problem as German equities are higher and the euro is unchanged.
  • Canadian retail sales have now fallen for the second month in a row as they declined by 0.1% in December after falling by 0.9% in January reflective of a weakened consumer and lower gasoline prices. Retail sales grew by 2.7% in 2018 and by 7.1% in 2016.
If we can help you with any Foreign Exchange needs, please email 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 Please do not reply to this email. To ensure the delivery of future emails, please add 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.
Equal Housing Lender
NMLSR ID# 536994 | City National Bank Member FDIC


Popular posts from this blog

Acquisitions or Alliances: What's Your Growth Strategy?