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Morning Brief 20.03.2017

20 March 2017

On the economic front on Friday, the university of Michigan consumer sentiment came out to 97.1 in March versus the 97.5 expected as compared to 96.3 in February. The 5-10 year inflation expectation component of the University of Michigan data was at +2.2% which is the lowest level.

U.S bonds strengthened due to the low inflation expectation in University of Michigan data. U.S dollar remained under pressure as it was widely expected that the Federal Reserve would increase the interest rate more frequently in current year.

G20 conference press release was the wakeup call for investors as G20 communiqué left no doubt that trade policy is taking U turn. The press release included the commitment of all member countries to strengthen the contribution of trade to economies, while prior indication to avoid all protectionism was omitted. Free trade was replaced by U.S policy of fair and balanced trade. A global supply chain and lowering the barriers has been a key factor for global growth and earning. One cannot expect to change that policy and expect the productivity and earning story not to be dented. This statement should serve as a wakeup call to investors.

Australian and New Zealand dollar trading higher in today’s trading on continued weakness in the U.S dollar after the Federal Reserve meetings. Analyst expect the U.S dollar to continue its downside movement this week because the Donald Trump’s fiscal stimulus plans is unlikely to emerge because there are not any major U.S economic data release today.

It is expected that Australia dollar is continue to move upward because of the strong iron ore prices. New Zealand services sector continue to strengthen, even after the BNZ-BusinessNZ performance of services index for February pointed to slight growth. New Zealand dollar is also expected to be firmer as Reserve bank of New Zealand is expected to keep interest rates same later in the week.