Welcome to my daily Markets Musings.
You’ll see things are different from now on. That’s because the full note was approaching 2,000 words some days and I’m breaking it up into a number of reports on the Axi Blog each day now.
That way traders can subscribe to the Axi Blog easily and then cherry pick the yarns and markets of interest
Feedback always welcome
Short and sweet this morning given the US holiday
Not a lot of action in the past 24 hours to kick off the week although the release of global PMI’s was a reminder that the trade wars are having a palpable effect on businesses across the globe. In the collapse in South African manufacturing PMI (43.3 versus 51.5 last) we also see what generalised uncertainty and a currency crisis can do to business too.
And this morning beside the Brexit induced funk for the Pound – which fell 0.7% against the USD to 1.2873 and 0.8% against the Euro with EURGBP at 0.9023 – there have also been some big moves on Em currencies as Argentina grapples with its economy and currency, Turkish inflation is through the roof, and the general sense that the USD and Fed will continue to put pressure on EM countries continues.
As it stands this morning the Argentine peso is down 2.6% with USDARS at 37.75, the Turkish lira is at 6.6072 down 1.36% against the USD, the Brazilain real has lost 2.5%, the South African rand is 1.1% lower while the Russian rouble has lost about 0.9%. EM currencies and markets are still a big risk folks.
Looking at the G10 it’s a much quieter 24 hours with the Aussie dollar the stand out performer with a 0.3% gain to 0.7212. The Kiwi has, in contrast lost 0.3% to 0.6599, while the CAD is 0.4% weaker with USDCAD up at 1.3091. Euro was stronger though with a 0.15% gain to 1.1616 and the Yen is marking time once more at 111.11.
To stocks and the FTSE was 0.97% higher on the back – it seems – of the weaker GBP even though the GBP fell because Brexit is becoming a mess and could tank the UK economy. That’s short termism for you I guess. The DAX and CAC were 0.15% either side of flat.
Asia, and Chinese commodity markets had a shocker yesterday – down again. That didn’t hurt the local market too much with the ASX losing just 9 points. SPI traders were down three an hour ago, then up 5, now they are down 2 again. We’ll see where we go today.
To commodities and Shanghai copper, aluminium, and nickel were all lower to kick off the week. Nothing like a 14 month low for the Caixin manufacturing PMI to do that. With the real chance we could see another $200 billion of tariffs placed on Chinese exports to the US in the next couple of weeks commodity markets are nervous about the Chinese economic outlook.
Gold is at $1200 still, Bitcoin is largely unchanged too at $7,295.
On the day South Korean GDP and inflation kicks us off before the Australian Q2 current account and government data to feed into tomorrow’s Q2 GDP. We also get the RBA decision and governor’s statement at 2.30 pm my time and then governor Lowe is speaking in Perth this evening. Euro PPI, UK construction PMI, and then US ISM and Markit manufacturing PMI’s are released along with construction spending and the IBD/TIPP economic optimism index.
Macro Stuff that affects everyone and everything – either today or eventually
Have a great day's trading.
Chief Market Strategist
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