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Market View

Market Recap-RBA keeps rates unchanged

Tuesday, May 7, 2019 10:20 AM GMT

The risk off mode that prevailed on this week’s market opening, due to Trump’s tweet on Sunday, has been followed by a quick rebound. Markets seem to discount the possibility of the USA-China trade relations deteriorating.

Bob Davis, a WSJ reporter that is closely following Trump’s tactics and had interviewed President Trump just before the G20 December’s meeting that marked the start of the current ongoing trade truce, is noting: “President Trump’s tough line will reduce friction later by giving Beijing an incentive to comply with a trade deal. The new Trump line: China must “earn” the removal of tariffs, especially after trying to reneg on a deal.”

The rebound (i.e. EUR, GBP, AUD, CAD, NZD strengthening) has been additionally fueled by yesterday’s better than expected European macroeconomic releases and today’s RBA (Central Bank of Australia) decision to keep interest rates unchanged. Note that the market participants were expecting a rate cut of 25bps today.



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