The Kiwi dollar opens higher this morning as risk sentiment improved on the signing of the US/China “phase one” trade deal yesterday. Markets, however, remain cautious with the hardest negotiations still yet to come and doubts have been casted on the agricultural purchases China has agreed to make.
US Data Signal Moderate Growth
Core retail sales and jobless claims both beat market expectations, providing a lift for the USD. Primary drivers of the upbeat monthly retail sales were from spending on food and beverage, health and fuel, which could be slightly tilted as a result of favourable Christmas spending and inflationary factors at play. Even if the headline numbers are skewed, its clear consumers are what’s propelling the US economy forward even in times of uncertainty. Markets won’t have to wait long to get another look at consumer data with the Michigan Consumer Sentiment Index due for release tomorrow morning.
ECB Meeting Minutes More Upbeat in December
Accounts of last month’s European Central Bank meeting were released this morning and indicated that policymakers took a more optimistic view on the economy in December. Minutes of the meeting showed policymakers see “mild indications” of rising inflation, and that economic growth may be stabilizing (albeit still weak). Easing US/China trade tensions should help Europe’s struggling manufacturing sector, although there are concerns that the US may point their trade crosshairs at Europe next. While the Euro got an initial boost from the ECB accounts, the gains have since been erased after this morning’s US data releases.
NZ manufacturing PMI will be released at 10.30am, with the key focus today on China’s Q4 GDP at 3pm. Tonight we have UK retail sales at 10.pm, followed by Euro zone inflation at 11pm and finishing out the week with a report on US consumer sentiment.
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