Newsletter – 18th September 2018

Morning Bulletin

Yesterday

  • We saw US dollar weakness yesterday as the markets worried over the USA-China trade conflict.
  • Beijing vowed to retaliate to any tariffs imposed by the US and as a result of that, we saw broad dollar losses.
    • Cable rallied by 0.69% following the news after opening at 1.3067 and closing at 1.3157.
    • EUR/USD took back losses made on Friday. It opened at 1.1623 and rallied just over 0.5% to close at 1.1683.
  • The UK economy would rapidly start to contract in the case of a disorderly exit from the EU according to an International Monetary Fund report that highlights the recession risks of a ‘no-deal’ Brexit. The IMF’s Managing Director Christine Lagarde added that there would be costs to the UK regardless of outcome that involves leaving the EU.
  • Canadian foreign securities purchases came in much stronger than expected at 12.65B vs 4.35B.
  • Empire State manufacturing index from the US came in soft at 19.0 vs 23.2 expected.
Overnight
  • Australian HPI q/q came in as expected at -0.7%.
  • GBP/AUD, GBP/NZD and GBP/JPY are currently trading at 1.8233, 1.9927 and 147.12.
Today
  • The Trump regime has implemented $200bn of tariffs on Chinese imports. The US president said in a statement “If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267bn of additional imports”. Trump has blamed what he calls unfair policies and practices for the escalation in the trade conflict between the two heavyweight economies. Market reaction has been relatively muted since the announcement.
  • In terms of economic data, there is quiet day ahead with only Canadian manufacturing sales m/m at 1.30pm.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1237 -0.18
GBP/USD 1.3139 -0.14
EUR/USD 1.1691 +0.08
AUD/USD 0.7217 +0.57
Time (GMT) Region Data Release Forecast Previous
13:30 CAD Manufacturing Sales m/m 1.0% 1.1%
Tentative NZD GDT Price Index -0.7%
23:45 NZD Current Account -1.32B 0.18B