Financial Market Review for April 20, 2018 Economic data released through the Asian session was on the lighter side this morning, key stats limited to Japan’s March inflation and tertiary industry activity index numbers. Consumer prices rose by 1.1% year-on-year in March, the annual rate of inflation easing from February’s 1.5%, with consumer prices sliding by 0.4% month-on-month, while the annual rate of baseline inflation eased from 1.0% to 0.9%. Year-on-year, fuel, light and water charges were up 4%, with prices for medical care and transportation and communication both up 1.7% providing support, while a 1.4% fall in prices for furniture and household goods weighed. Month-on-month, a 1.4% fall in food prices and a 1% fall in prices for furniture and household utensils more than offset a 1.6% rise in prices for clothes and footwear. The Japanese Yen moved from ¥107.397 to ¥107.451 against the U.S Dollar upon release of the inflation figures, which give the BoJ more reason to stand pat on policy over the near-term. Crunch time is this year’s Shunto, the annual spring wage negotiations, with there being some optimism from the results of negotiations at many companies. Japan’s tertiary industry activity index was flat in March, falling short of a forecasted 0.1% increase, following February’s 0.6% fall. Wholesale trade, information and communications, real estate and living and amusement-related services weighed on the index in March, wholesale trade weighing most heavily, down 1.9% to offset a 1.4% rise in transport and postal activities, with a number of other industries contributing minor gains to the index. The Japanese Yen moved from ¥107.65 to ¥107.663 against the Dollar upon release of the figures. Elsewhere, the Aussie Dollar was down $0.18% to $0.7716, rising U.S Treasury yields overnight and a pullback in commodity prices weighing through the early part of the day, the shift seeing the Kiwi Dollar down 0.36% to $0.7246 at the time of writing. For the Yen, the jump in Treasury yields and disappointing inflation figures saw the Yen slip further from the release of the stats, down 0.26% to ¥107.65. In the equity markets, the majors were in the red at the time of writing, with the CSI300 sliding 1.01% to lead the way down, the Hang Seng and ASX200 down 0.42% and 0.22% respectively, while the Nikkei was down just 0.07%, the markets seeing the tech sector slide. Talk of the U.S introducing laws to curb Chinese investments into sensitive technologies in the U.S added to the downward pressure through the morning, with risk appetite deteriorating in the wake of the jump in U.S Treasury yields on Thursday. For the EUR, economic data scheduled for release out of the Eurozone is limited to Germany’s March wholesale price inflation figures. Following some soft inflation figures, an uptick in wholesale price inflation would provide some support to the EUR, though the jump in U.S Treasury yields on Thursday will have a hand in direction for the day.
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Financial Market Review for April 20, 2018 At the time of writing, the EUR was down 0.04% to $1.2330. For the Pound, it’s been a torrid week, with weak retail sales figures and softer inflation numbers doing the damage. There are no material stats scheduled for release through the day to provide some upside, Dollar strength adding to Cable’s 0.82% slide on Thursday that leaves the Pound down 1.06% through to Thursday’s close. The Pound will now be shrouded with uncertainty ahead of next month’s BoE monetary policy decision. On the upside, the weak retail sales figures were attributed to weather conditions in the UK in March and inflation continues to overshoot the BoE’s 2% target, with the unemployment rate reflecting a tight labour market, the combination of which may be enough for the BoE’s hawks. An issue for the BoE and also the Pound is Brexit, with the Theresa May losing more political support on her vision for Brexit, with a upper house vote against one of the key elements of the Prime Minister’s Brexit bill going against her this week, which could see more in-fighting among the Conservatives and will likely lead to more uncertainty, with a lack of news on progress in Brussels on trade talks providing little support for May or the Pound At the time of writing, the Pound was down 0.08% to $1.4055, with more pain to come should news on the political front continue to be on the negative side. Across the Pond, it’s a quiet day on the data front, with no material stats scheduled for release this afternoon, leaving the Dollar in the hands of the Oval Office and the FED’s Williams who is due to speak later today. At the time of writing, the Dollar Spot Index was up 0.02% to 89.954, with inflation expectations hitting Treasuries and the global equity markets. Across the border, following some decent nonfarm employment change figures on Thursday, inflation and retail sales figures are due out this afternoon. Following the more cautious than expected BoC earlier in the week, today’s numbers could reverse the Loonie’s decline should the numbers impress, though whether upbeat figures will shift the central bank’s stance on policy near-term remains to be seen when uncertainty around the conclusion of NAFTA talks continues to linger. At the time of writing, the Loonie was up 0.02% to C$1.2669, Thursday’s nonfarm payroll figures providing little support by the end of the day, as the U.S Dollar rallied through to the close. View our full economic calendar for a daily roundup of major economic events.
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