New Zealand Starts a Trend?

New Zealand cut interest rates last night, and at the same time they seemed to be hesitating to give the impression that there is more to follow.

RBA, Central Bank of Australia, seemed to give the impression that they are happy with rates where they are for now.

We think the Fed is in the same boat.

Things to keep an eye on!

Turkey is back spotlight as the currency weakens. Turkey threatening to buy a missile system from Russia is a threat to NATO cooperation and U.S. relations. https://www.france24.com/en/20190505-turkey-buy-russian-missiles-despite-us-threats

Iran, appears to be withdrawing from parts of the nuclear pact agreement.

The Trump administration is deploying a carrier strike group and bombers to the Middle East.

The market is looking at Friday as a key day for China/U.S. trade talks.

China exports fell in April while imports rose. 

Gold is hitting recent highs at 1287 on the back of global tensions.

Gold hitting high and key resistance level

USDJPY breaking lower on the back of risk off environment in markets

VIX Index reflecting the market stress

A note on Norway. The EURNOK is trading weaker since testing the 9.55 support level.  Currently trading at 9.8250 level.  This is surprising given the solid economic situation that we see in terms of employment activity levels and the solid fiscal position. Our view has been that the NOK trades more off of general market volatility and uncertainty. As the global stock markets rallied since December, the NOK benefited due to low volatility and to risk on markets. As we face the uncertainty outlined earlier in this note, the NOK is on the defensive.

The IMF was out with a report that outlined a pretty positive story compared to the rest of Europe.  https://www.imf.org/en/News/Articles/2019/05/06/mcs-050619-norway-staff-concluding-statement-of-the-2019-article-iv-mission

Summary from Norwegian Ministry of Finance (in Norwegian)

https://www.regjeringen.no/no/aktuelt/pressemelding-imf/id2643883/

In short it gave support to the idea that a hike in 2019 is warranted.

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