DXY was stable overnight:
But the Australian dollar jumped across the board:
Gold was hit:
Oil rose:
Metals too:
An miners
:
EM stocks struggled:
Junk yawned:
Treasuries were sold:
Bunds too:
Aussie bonds were belted:
Stocks were stable:
Westpac has the wrap:
Event Wrap
US durable goods orders fell by a larger than expected 1.3% in May led by weakness in the always volatile aircraft category. Beyond that the May data showed some encouraging resilience for business investment; core capital goods orders posted a healthier 0.4% gain in May while core capital goods shipments, a proxy for business investment rose 0.7% in the month and the previous month was revised up to show a 0.4% increase from 0.0%. The US advance trade good report widened more than expected in May to $74.5bn from $72.1bn
FOMC member Daly said she’s uncomfortable with the low level of inflation, adding that the Fed may need to do more to get it back up to the 2% target.
President Trump reasserted his right to remove Fed Chair Powell from his post in a wide ranging interview with Fox Business, complaining that, “He’s not doing a good job” but spoke glowingly of the ECB President noting, saying he should be at the helm, “We should have Draghi instead of our Fed person”. On trade, he threatened once again to impose tariffs on the remaining $300bn in goods from China if there’s no progress on a deal when he meets President Xi at the G20 later this week, “My plan B’s maybe my plan A, my plan B is that if we don’t make a deal I will tariff, and maybe not at 25%, but maybe at 10%. Trump complained about the weak yuan too, “They devalue their currency like a ping-pong ball.”
Event Outlook
NZ: the monthly business confidence survey (ANZ) has for some time been indicating slower economic growth. The May update ticked up slightly but remained in subdued territory.
Euro Area: Jun European Commission surveys are expected to show the business climate indicator edging down to 0.29 from 0.30 and economic confidence down to 104.8 from 105.1. Jun German and Spanish CPI are out ahead of the Euro Area release tomorrow.
US: Q1 GDP 3rd estimate is expected to revised up to a 3.2% annualised pace from 3.1%. May pending home sales data and the Jun Kansas City Fed index are released.
The big news was this:
Treasury Secretary Steven Mnuchin told CNBC on Wednesday the U.S. and China were close to a trade deal, and he’s optimistic that progress can be made during weekend talks between President Donald Trump and China’s Xi Jinping.
“We were about 90% of the way there [with a deal] and I think there’s a path to complete this,” he told CNBC’s Hadley Gamble in Manama, Bahrain.
He said he’s confident Trump and the Chinese president can make progress in stalled trade talks at the Group of 20 meeting. “The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship.”He did not provide any detail on what the final 10% of an agreement might entail, or what the sticking points are to completing a deal.
We can guess. The 10% is anything that will actually make it worth doing for the US. Ending forced technology transfers and IP theft and enforcement therein.
The Trump Administration can play this game for a long time to keep markets up but there is nothing actually new here.
Still, while the hope floats, so will the Australian dollar.
