Morning Commentary: “To Jump Out of the Frying Pan into the Fire”
A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
“To Jump Out of the Frying Pan into the Fire”
Share this story:
Alan Rose Foreign Exchange Senior Trader
The sense of this expression has always been to escape one evil predicament by leaping into another condition that is just as bad or potentially worse. Yesterday, markets breathed a sigh of relief as a temporary truce between the U.S. and China over trade and a reestablishment of trade talks provided a short term positive risk sentiment for investors. As we pointed out yesterday, the truce alleviates the immediate risk, but the underlying core differences between U.S. and China still remain; we can anticipate a long and drawn out negotiation and a bumpy ride for the markets.
One of the key stories this morning is that the U.S. is now proposing $4 billion worth of tariffs on EU goods regarding an Airbus-Boeing dispute. It would appear that the White House is jumping from the frying pan and into another fire as the EU has readied their own retaliatory tariffs should the U.S. choose to initiate these tariffs; this could lead to another long and drawn out negotiation that will once again impact the global economy in a negative manner.
The timing of this potential trade action can certainly be questioned given the ongoing concerns about future growth here and abroad as the U.S.-China trade war has already taken its toll on the global economy. The proposed tariffs will only add to the strained tensions between Washington and Brussels over trade and other geopolitical issues. The market reaction has generally been muted so far with G7 interest rates lower, global equities mixed, and the U.S. dollar (DXY) slightly weaker after yesterday’s gains.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
The Reserve Bank of Australia cut interest rates by 25 bps to 1.0% as expected. Governor Lowe signaled that the central bank would likely pause after back-to-back rate cuts to monitor the impact on the Aussie economy. The Australian dollar is the top performing major currency today and has been exhibiting signs of bottoming over the past weeks as the market senses that the end of the rate cutting cycle is near for Australia.
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
Exclusive webinar: The market, my portfolio, and options. Exclusive webinar: The market, my portfolio, and options. View in a browser Fidelity Fidelity Log in The market, my portfolio, and options The market, my portfolio, and options
Post a Comment