Earnings Watch: More evidence of Chinese weakness?
In our latest assessment of the current corporate earnings season we take a look at three blue-chip bellwethers of the health of the Chinese economy.
Head of FX Strategy, Saxo Bank Group
Summary: The US dollar bounced back from its midterm election kneejerk slump as US yields jumped on an ugly 30-year T-Bond auction. Next up is tonight’s FOMC meeting with a small but significant minority not expecting a December rate hike.
Tonight sees a Federal Open Market Committee meeting, the last that will not feature a press conference with Chairman Powell, as he will hold a presser at every meeting in 2019. We look for few changes to the statement and a Fed that remains on course for a December rate hike.
The extension in NZD strength has reached remarkable proportions after the NZ Q3 earnings data earlier this week and the Reserve Bank of New Zealand overnight (more below on that). It could extend yet higher if the US and China can at least reach a ceasefire agreement in coming weeks ahead of the new elevated tariff. A real trade deal is unlikely in our view. In any case, this pair is at a key technical crossroads in the 0.6800 area, a major prior low and area of consolidation earlier this year as well. Here and possibly up to the 200-day moving average at 0.6906 and falling looks like an area for longer-term bears to set up shop.