After the extreme volatility of last week, the financial markets had a relatively stable day yesterday with nothing massive in terms of new news or data to push it from recent levels. The dollar did pull back again across the board over the course of the trading sessions and this move was helped along by worse than expect data from the US Retail Sales numbers. Equity markets were mixed across the board with the US indices finishing up the day in the red once again but by nowhere near the extent of some of last weeks moves.
This morning we’ve seen a surprise to the topside in the Kiwi CPI data with both the QoQ (0.9%) and YoY (1.9%) beating expectations by 0.2%. The year on year number is particularly telling as it brings the number up to touching distance of the RBNZ’s target of 2%. This should keep the kiwi dollar supported over the next few sessions and start to raise more questions for the RNBZ which had indicated that the next move could be a cut if conditions didn’t improve over the medium term.
Looking ahead to today’s trading and it’s more of the same really with investors still focussed on the main themes that have been dominating global markets for the last few months, the Chinese – US trade situation is still looking fragile and markets should struggle to rally strongly while doubt remains for global growth. The Brexit situation is still very volatile and sterling will remain whippy until we have further certainty on the ‘deal or no deal’ issue currently dominating headlines in the UK and Europe is still concerned about Italy and it’s fiscal plans. If you add the political situation surrounding the Saudi’s at the moment there is plenty of potential for further volatility across the markets as the week progresses.