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Risk Appetite Returns Ahead of G20 Talks with Presidents Trump and Xi Jinping

Published November 27, 2018

The Kiwi opens higher this morning as risk appetite returns with hope for progress on the US-China trade tariffs, ahead of the anticipated Trump-Xi meeting at the G20 later in the week. Market sentiment was also boosted by Italy’s government who may cut their budget deficit forecast for next year.

NZD shrugs off weak Q3 retail sales

New Zealand’s quarterly retail sales came in flat for the third quarter and falling short of economist’s forecasts by 1%. According to Statistics New Zealand, the drag in consumer spending was largely due to consumers holding off on buying food and motor vehicles. The NZD initially dipped around 30 points on the release before shrugging off the disappointing data.

Italy looks to reduce next year’s budget deficit

Italy’s government may reduce next year’s budget target as low as 2% of GDP to avoid disciplinary action from the European Commission. European stocks and Italian bonds surged higher on signs that both parties in the governing coalition are willing to compromise on the budget deficit target. Euro gains were short-lived as ECB Head Draghi stated Euro-Zone data has been weaker than expected with signs that growth is slowing.

EU and UK PM May state there is no better deal on the table for Brexit

After securing a divorce deal with the EU on Sunday, British PM May now faces the fierce task of getting the agreement approved by the British Parliament which is scheduled to vote in two weeks. The GBP remains under pressure with concerns of the Brexit deal getting rejected.

Trump has stated that the Brexit agreement as it stands means the UK may not be able to trade with the US.

Focus this week will be on the Fed speech on Thursday, and Presidents Trump and Xi meeting at the G20 over the weekend.