Global Themes

NZD

Trump threatens to shutdown the Government

Market gains reversed after President Donald Trump comments.

Markets turned negative as Trump said he would be proud to shut down the government if his demands for border funding aren't met. Initially, the risk sentiment was positive as news that China is planning to cut car tariffs for the US and reports that Mnuchin and Liu discussed a timetable for trade talks.

Markets remain poised for an announcement from Trump on China Trade. Offshore equities remain soft, US 10 Year treasury yields are at 2.85% with remaining curve flattening pressure. Despite market uncertainty the Kiwi dollar is little changed at 68.7 USc.

Confidence miss

Disappointing Australian Business Confidence.

Australian business confidence fell again for the month of November. An index of business conditions also fell continuing a downtrend in conditions that has been building all year.The business sector has lost some momentum with confidence levels now below average, suggesting that businesses themselves think momentum will slow further.

In Germany, an important business survey of economic expectations came in negative again, but much less negative than many were expecting and less negative than in November. Given the state of sentiment in Europe these days, this is seen as an improvement.

The Aussie confidence result has enabled the new NZDAUD highs to hold at 0.9540. NZDEUR is up slightly at 0.6070.

FOMC takes main in focus

Will the Fed turn Dovish?

Next Thursday, we anticipate the important U.S. Federal Reserve Open Market Committee announcement. Speculation has been increasing that the U.S. Fed will scale back on its rate hike guidance. Expectations are for a rate hike next week, but market participants will be seeking guidance on future rate movements.

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