FX Explained MacroWatch: w/c 12/08/19

Intermediate

Recap

  • A reaction last Sunday/ Monday from China with a currency depreciation versus the US Dollar; USDCNY pushed through the 7.00 barrier.
  • This stimulated another aggressive global stock market selloff Monday, with major global equity averages echoing selloffs seen at the end of July and to start August.
  • The lack of further trade war tensions from Tuesday and a USDCNY correction lower, however, saw major global equity indices recover (with short-term bases established).
  • Tuesday saw the Reserve Bank of New Zealand (RBNZ) cut interest rates by 0.5%, more than expected, with both the New Zealand and global economic slowdowns cited as reasons for the cut. NZDUSD sold off aggressively, by more than 1%, but rebounded into the week. The Australian and Canadian Dollars also weakened with NZD, but also rebounded through the week.
  • Friday saw quarterly GDP data for the UK print far more negatively than anticipated, with the forecast at 0.0%, but coming in at -0.2%. The first quarterly contraction since 2012 is seen as a reaction to No Deal Brexit worries and saw the Pound plunge against the Euro and US Dollar. EURGBP hit a five-year high and GBPUSD hit a two-year low.

Key this week

  • Key again to watch this coming week will be comments from Federal Reserve speakers regarding the impact on the US economy from the further imposition of tariffs on China and the trade war escalation.
  • Plus, any further developments from the US-China trade talks.
Date Key Macroeconomic Events
12/08/19 No data of significance
13/08/19 German CPI and ZEW Survey, UK Employment report, US CPI
14/08/19 China Retails Sales and Industrial Production, German GDP, UK CPI, EU GDP and Employment report
15/08/19 Australian Employment report, UK Retail Sales, US Retail Sales, Industrial Production and Capacity Utilization
16/08/19 US Michigan Consumer Sentiment Survey
Date Key Earnings Events Country
14/08/19 Cisco US
15/08/19 Walmart US

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