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The past month has been a challenging one for markets with ongoing uncertainty around international trade, political tensions in Europe and strains in some emerging market economies – factors contributing to US 10 yr bond yields pulling back from recent highs, points out the research team at Westpac.

Key Quotes

“The US dollar gained further strength, supported by confidence in the US growth story. The Australian dollar declined to US74 ¢ and has further to fall in our view. Financial pressures are evident in China, with the Renminbi weakening and shares declining as China’s growth outlook comes into focus.”

“China is experiencing a deterioration in external demand and domestic fixed asset investment, as authorities chart a new course, one that gives greater prominence to the ‘quality’ of growth.”

“In Australia, the RBA remains on hold, with it’s central case forecast for growth to be a bit above 3% in 2018 and 2019 unchanged. However, RBA statements recognise some uncertainties, global as well as domestic, including an increase in short-term wholesale interest rates in Australia and the possibility of some further tightening of lending standards in the housing market.”