- Rand weakens on Zuma’s win
- Poor Chinese inflation data worries the commodity markets
- RBNZ likely on hold but their rate forecast is key
By David Johnson
South African president Jacob Zuma survived a no-confidence vote yesterday but it is clear that some of his own party MPs voted against him. I suspect there will be ramifications, but the Rand lost about 30 cents against the Pound as the result came through.
The war of words between the West and North Korea is gaining momentum. The North Koreans say they have perfected a missile sized nuclear warhead and might be considering targeting the American State of Guam. The Americans are understandably angry and President Trump threatened “fire and fury like the world has never seen,” if Kim Jong Un tries to flex his muscles. Someone somewhere must be doing a roaring trade in nuclear bunkers and canned goods.
The market reaction to what is still thankfully rhetoric has been muted, but the USD has lost some of the ground it gained last week. This afternoon’s US productivity and labour costs data is forecast to be rather mixed, so there is scope for the USD to lose a little more ground.
China announced poor inflation data overnight; a match to the poor trade numbers released the night before. Consumer inflation rose just 1.4% on the year, well below forecasts. Producer price inflation (PPI) was up 5.5%, though; in line with forecasts and PPI does tend to feed into consumer inflation a few months down the line. This fall in consumer inflation has a minor impact on the currencies of the countries that supply China.
Today’s data diary is duller than a wet morning in January. Nothing is planned that will move the markets, but that doesn’t legislate for the unexpected – and we are getting plenty of that of late.
Overnight tonight, the Reserve Bank of New Zealand will most likely leave the NZ base rate on hold, but we expect concerns to be raised once again by Governor Graeme Wheeler over the strength of the NZ Dollar and many suspect he will extend the time frame for any kind of rate hike. The Kiwi Dollar has already weakened on the expectations, so if that doesn’t happen, the NZD could well strengthen a fair bit overnight. Worth noting if you need to buy NZD in the short term.
Chopsticks are the reason the Chinese never invented custard….Spike Milligan
My definition of an intellectual is someone who can hear the William Tell overture without thinking of the Lone Ranger… Billy Connolly
I have kleptomania. But when it gets bad I take something for it….Ken Dodd
The first time I see a jogger smiling, I’ll consider it…Joan Rivers