A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Better to Be Safe Than Sorry
Share this story:
Alan Rose Foreign Exchange Senior Trader
As we arrive this morning, global equities are correcting lower as concerns mount about a continuing global economic slowdown and near zero progress related to the U.S.- China trade talks. Overnight, more evidence validating the concerns about weaker future growth came through the analysis of the Japanese trade data and the fact that South Korea, Indonesia, and South Africa all cut interest rates today joining the recent rate cuts by Australia, India, and Russia.
Japanese trade data today revealed the same ongoing issues that other Asian countries are experiencing as trade tensions continue to weigh on export and import volumes resulting in weaker growth. Japan reported a much larger trade deficit for June than expected, but the numbers within the numbers were revealing with both imports and exports contracting sharply. This fits into the same market dynamic matching Singapore’s negative 3.6% GDP in Q2 as trade volumes decline resulting in less demand and weaker growth.
These dovish actions by other central banks and a lack of progress on the U.S.-China trade talks all but ensure the Fed will cut interest rates at the end of the month. The ECB will be up next week and markets will be keying off of any new actions or change in language related to growth and inflation. Between now and then, expect the U.S. dollar to continue to be generally range bound and lacking direction.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Indonesia cut interest rates as expected by 25 bps to 5.75%.
South Korea cut interest rates by 25 bps to 1.50%; the market was divided as to whether the central bank would stand pat or cut rates today. Today’s action reverses a rate hike back in November.
South Africa cut interest rates as expected by 25 bps to 6.50%.
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:
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.
Tune in for a guide to ETFs and investing strategies for potential long-term success. View in a browser Fidelity Fidelity Log in Creating a portfolio with ETFs: Why and how Creating a portfolio with ETFs: Why and how