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Market Watch - Tuesday 20 August 2019
02:30 AUD RBA Minutes of August Policy Meeting
See key data for this week >
Sterling edged lower yesterday ahead of PM Johnson’s meetings with Angela Merkel tomorrow, and Emmanuel Macron on Thursday. Yesterday, the PM sent a letter to EU Council President, Donald Tusk, to set out the UK’s Brexit position. Johnson said the deal, in its current form, is unable to pass the House of Commons due to the backstop, and it must be removed. The EU has repeatedly rejected a re-opening of the withdrawal agreement.

In Italy, PM Conte is due to face a confidence vote in the Senate this afternoon. If Conte loses the vote, then President Mattarella could call for snap elections or try to broker a new cross-party alliance between Five Star and Renzi’s PD to avoid interference with the 2020 budgeting season. The political uncertainty in Italy will not help the euro. 

Yesterday, FOMC member Rosengren pushed back against further US rate cuts arguing that the economy remains in good shape, and he does not expect a significant slowdown. Rosengren voted against the first rate cut last month and said he wants to see more evidence that rate cuts are warranted. The comments supported the dollar across the board and came a few hours after President Trump tweeted that the Fed should cut rates by 1% and restart QE. This shows the market is paying more attention to the Fed than Trump. Traders will be keen to hear from Fed Chair Powell when he speaks at the annual Jackson Hole conference on Friday.

Yields on US Treasuries climbed away from 3-year lows, helped by the prospect of Germany removing its balanced budget rule to boost spending and also by stimulus measures by China. The Chinese yuan moved lower in onshore trade against the stronger dollar after the People’s Bank of China set its new lending rate slightly lower.
This week's key data
Mon Aug 19
00:01 GBP Rightmove House Prices
10:00 EUR Euro-Zone Consumer Price Index
Tue Aug 20

02:30 AUD RBA Minutes of August Policy Meeting

Wed Aug 21
09:30 GBP Public Sector Net Borrowing
12:00 USD MBA Mortgage Applications
13:30 CAD Consumer Price Index
15:00 USD Existing Home Sales (MoM)
19:00 USD FOMC Meeting Minutes
Thu Aug 22

00:00 AUD CBA Australia PMI Composite
08:30 EUR Markit/BME Germany Composite PMI
09:00 EUR Markit Eurozone Composite PMI
13:30 USD Initial Jobless Claims
14:45 USD Markit US Composite PMI
15:00 USD Annual Federal Reserve Policy Symposium in Jackson Hole
Fri Aug 23

00:30 JPY National Consumer Price Index
13:30 CAD Retail Sales
15:00 USD New Home Sales
15:00 USD Annual Federal Reserve Policy Symposium in Jackson Hole
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