XE Morning Update November 29 2019

NZDUSD 0.6414 -0.1%
NZDEUR 0.5827 -0.2%
NZDGBP 0.4969 -0.1%
NZDJPY 70.25 0.0%
NZDAUD 0.9483 0.1%
NZDCAD 0.8521 -0.1%
GBPNZD 2.0121 0.1%

It was a calm day yesterday, with both the USA and volatility taking a day off. The ranges that have bound markets of late are yet to be unshackled. As always it is a good reminder to never get complacent, as often after a quiet period, when markets move, they move fast and far.

In quite an interesting aside, China has overtaken Europe in terms of GDP. To put that in perspective, back in only 1992 the EU was 15 times larger. Even now though, the Yuan only accounts for 2% of all global FX reserve holdings with the EURO coming in at 10 times that. Were the world to rebalance reserves based on ratio of world GDP, you could expect a seismic shift in the value of the Yuan. This is a very long term view, but given the jockeying for position currently going on between the States and the China over the Trade war and now Hong Kong, it becomes increasingly relevant. Fundamentally understanding the long term geopolitical tensions and drivers will give us the best chance to envision what the future will look like.

Back to the near term, the market is going to start to focus on the RBA’s rate decision next week. There is growing divergence in expectations on whether or not the RBA will cut rates again in the next 12 months. However what most can generally agree on is that next weeks meeting is not that “live”, and a hold is 90% priced in.

Global equity markets are generally higher across the board, - Dow +0.15%, S&P 500 +0.42%, FTSE -0.18%, DAX -0.31%, CAC -0.24%, Nikkei -0.12%, Shanghai -0.47%.

Gold prices are still flat, at $1,462 an ounce. WTI Crude Oil prices are up by 0.5% to $58.24 a barrel.

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