Financial Market Review for March 20 2018 The U.S Dollar was on the move this morning as focus continues to shift to tomorrow’s FOMC, with FED Chair Powell having raised the prospects of penciling in 4 rate hikes for the year. For the Pound, this morning’ inflation figures will be key, while ECB members also talk of a shift in policy in interest rates.Economic data through the Asian session this morning was limited to New Zealand’s Westpac Consumer Sentiment figures for the 1st quarter and Australia’s house price index figures for the 4th quarter, while the RBA released the minutes from its monetary policy meeting of 6th March. For the Kiwi Dollar, the consumer sentiment index rose from 107.4 to 111.2 in the 1st quarter, to sit just below a long-run average of 111.4. The weak 4th quarter figures were attributed to New Zealand’s general election, with falling mortgage rates and rising house prices supporting consumer willingness to spend in the current quarter. The Kiwi Dollar moved from $0.72425 to $0.72428 upon release of the figures, before sliding to $0.7217 at the time of writing, down 0.37% for the session. For the Aussie Dollar, house prices rose by 1% in the 4th quarter, which was far better than a forecasted 0.1% rise and 3rd quarter 0.2% decline. While the figures were positive, the moves in the Aussie Dollar were more attributed to the RBA minutes released at the same time. There was nothing new in the minutes, with the RBA noting that the global economy continued to expand at a solid clip, supporting trade terms for the Australian economy that was on an improving trend, with labour market conditions tightening further. Expectations are for rising employment to support a pickup in wage growth as spare capacity falls through the year. The RBA also expects inflation to move to just above 2% by the end of the year, unchanged from the previous minutes. Within the minutes, there was ultimately nothing dovish other than continued concern over household debt and weak wage growth, while there were no indications of a shift in policy near-term. The Aussie Dollar moved from $0.77049 to $0.77145 upon release of the data and minutes before pulling back to $0.7701 at the time of writing, down 0.22% for the morning. For the Japanese Yen, there was finally some respite, with the Yen down 0.21% to ¥106.32 against the U.S Dollar, with the Yen having given up gains from earlier in the day on Monday to end the day in the red by the close. Concerns over the FOMC economic projections reflecting 4-rate hikes in tomorrow’s release is certainly something that’s got the markets jittery, though they’ve actually been jittery for much of the year, with Trump’s moves in the U.S another cause for concern. In the equity markets, the Asian majors followed the U.S markets into the red this morning, with the Nikkei leading the way, down 0.61% at the time of writing, with the Hang Seng and CSI300 down 0.54% and 0.48% respectively, as the ASX200 ended the day down 0.39%.
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