APAC Morning Update - 8 Dec 2020

Australia

The AUD is continuing its push higher amid rising iron ore prices and surging imports of the commodity by China.

With 60% of China’s Iron ore coming from Australia, and such a high demand currently, this can only be positive for the AUD short term.

New Zealand

The NZD has bounced off 0.7000 as risk appetite continues prior to key housing numbers.

House price inflation has been a big topic over the last few weeks, with the current government pledging to tackle the issue and floated the idea of incorporating house price inflation in the RBNZ’s remit.

This low interest rate environment has not only fuelled the Kiwi dream of home ownership, but has been a factor in pushing the NZD higher since the first COVID lockdown.

China

China has posted an enormous trade surplus in November with exports up and impressive 21% with imports continuing to rise. Their FX reserves rose by US$50 Bln boosted by a weaker USD.

USA

The US is awaiting the details of a new stimulus package, with COVID cases sweeping across the country, and the FDA are looking to approve and release the Pfizer vaccine in large quantities to ease the pressure.

The Trump administration is also trying to rachet up pressure on China over its crackdown on dissent in Hong Kong.

Europe and the UK

Boris Johnson warned that trade talks could collapse unless negotiators make rapid progress, but the chances of that are unlikely given the history of Brexit talks.

What to expect

With commodity exports rising, the looming stimulus package in the U.S an a weak USD, the AUD looks strong going into Xmas and the new year.

The NZD is still well supported, and with negative interest rates not likely next year, a weak USD and a fresh stimulus package in the USA on the way, the near term looks higher.

Global equity are mostly lower today: Dow -0.6%, S&P 500 -0.3%, FTSE +0.1%, DAX -0.2%, CAC -0.6%, Nikkei -0.8%, Shanghai -0.8%.

Gold prices are up 1.3%, currently trading at $1,863 an ounce. WTI Crude Oil prices are down -1.2% trading at $45.72 a barrel.