ALPHA Market Update 23 October 2018


Market Update




United States

  • The S&P 500 index closed down 0.43%. The Dow Jones fell 0.50%. The Nasdaq gained 0.26%.
  • S. Treasury Secretary Mnuchin said that he is open to the revision of the standards for the revision of the currency manipulator. Two modifications are currently being considered, one is to identify the currency manipulators in a broad definition in the 1988 Trade Act, even if the country to which this label is attached does not meet the specific criteria in the 2015 law. The other is to modify the specific certification criteria.


  • GERMANY has demanded Remainers be given a second referendum following claims Brexit could completely destroy the EU. Speaking on German political debate programme Anne Will, former Secretary of State Sigmar Gabriel waded into the deadlocked Brexit negotiations by suggesting Prime Minister Theresa May’s answer to stalled talks would be to give Remainers a second vote. Mr. Gabriel outlined a handful of bizarre points he believed made the Brexit ballot illegitimate, such as how teenage Britons too young to vote in the June 2016 referendum would now – according to him – almost certainly vote to Remain in a second referendum. He also said the UK getting a deal with the EU would undermine the bloc’s single market rules. He spoke about fears that Italy would follow suit and demand their own departure from Brussels, adding that should Brexit go ahead “the EU will be done for”.


  • AUD has endured a soft start to the week after the government lost a one-seat majority in parliament and as the U.S. criticised China’s response to efforts at de-escalating the so-called trade war between the world’s two largest economies.
  • Australia’s ruling coalition lost its majority in the House of Representatives Saturday when voters plumped for independent candidate Kerryn Phelps over the Liberal Party’s man David Sharma in the Wentworth by-election. Wentworth has been vacant since former Prime Minister Malcolm Turnbull resigned after being dethroned in an August leadership challenge.

New Zealand

  • New Zealand Dollar outlook remains dire over a medium-term horizon but the Kiwi is likely to enjoy a continued rebound over coming weeks as sellers cash up and walk away from earlier trades, according to analysts at Westpac.
  • New Zealand’s Dollar rose by more than 1% last week as other so-called risk assets, such as stock markets rebounded from earlier losses. Analysts said at the time the move was likely driven by “position squaring” and more have since come out to say the pop higher by the Kiwi unit has further to run.
  • “The immediate outlook for NZD/USD is unclear, with the impact of this week’s strong NZ CPI data offset by the US dollar’s recent rebound. Given extreme short positioning, though, there remains upside potential towards 0.6725 over the next few weeks,” says Inre Speizer, an Auckland-based currency strategist at Westpac.


  • Sanctions on Iran are expected to remove about 1 million barrels a day from the world market by the end of the year, just as Saudi Arabia, the world’s largest exporter, is under a cloud for the death of Saudi journalist Jamal Khashoggi. But the market is not expecting any shortfall and has faith in Saudi Arabia to meet the increases in output it promised, mainly due to the confidence it has in Saudi’s energy minister Khalid al-Falih. Analysts say a factor behind the recent softness in oil prices is a slowing in emerging markets demand due to higher oil prices, as well as trade wars and a rising dollar.
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