Financial Market Review for February 19 2018 Asian equities are on the rise again this morning, while the Dollar stumble resumes on a light trading day, with China, HK, the U.S and Canada on holiday today. Economic data through the Asian session this morning was limited to Japan’s January trade figures. Exports rose for the 14th month in a row by 12.2% to ¥6,086bn, which was better than a forecasted 10.3% and December 9.3% rise, whilst January’s trade balance reversed from a ¥359bn surplus to a ¥943bn deficit. January’s trade deficit was the first deficit since May of last year, as rising fuel costs lead to imports increasing by 7.9% to ¥7,029bn. From an economy perspective, the upbeat import figures are a positive for Prime Minister Abe who is looking for increased domestic consumption, while the stronger Yen may weigh on inflationary pressures. While exports to the U.S were on the rise, the trade surplus with the U.S narrowed, with exports to China rising by a whopping 31% year-on-year. The yen moved from ¥106.145 to ¥106.311 against the Dollar upon release of the figures, with the markets taking the export figure as yet another positive indicator for the global economy, before easing further to ¥106.60 at the time of writing, down 0.11% for the morning. Elsewhere, the Aussie Dollar was up 0.27% to $0.7926, with the Kiwi Dollar up 0.14% to $0.7396, the pair getting support of Friday’s fall in U.S Treasury yields. In the equity markets, the lack of material economic data and lighter trading volumes did little to dampen risk appetite, with the Nikkei up 1.62% and the ASX200 up 0.73% at the time of writing, supported by gains in the Dow, S&P500 and NASDAQ minis this morning. Both the China and Hong Kong markets were closed for Chinese New Year, with the HK market opening tomorrow and China open for business on Thursday. For the EUR, there are no material stats scheduled for release through today’s session, while stats for the week are on the heavier side, with prelim February private sector PMI, German consumer, business confidence and 2nd estimate GDP figures there for the markets to consider along with the ECB’s monetary policy meeting minutes. Interestingly, the markets have shown little regard to the political stand-off in Germany, with SDP members voting tomorrow on whether the party should proceed with the grand coalition. While the general view is that the vote will be in favour of the coalition, SDP support continues to fall, which could lead to a surprise vote, the results scheduled for release on 4th March. At the time of writing, the EUR was up 0.12% to $1.2410, with a softer Dollar contributing to the EUR’s early gains. Across the Channel, with no material stats out of the UK, focus will be on tonight’s scheduled BoE Governor Carney speech that comes ahead of tomorrow’s inflation report hearings. Carney has been particularly hawkish of late and there may be more to come tonight and tomorrow that could fuel another Pound rally.
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Financial Market Review for February 19 2018 On the Brexit front, EU negotiator Verhofstadt has said that there would be no trade agreement before Britain’s departure from the EU, with negotiations only to start once Britain enters its transition period. Across the Pond, volumes will be on the lighter side with the U.S on holiday in commemoration of President George Washington’s Birthday, which will likely leave the Dollar on the back foot through the day, with the Canadian markets closed for Family Day. Loonie was up 0.17% to C$1.2537 against the U.S Dollar, as crude oil prices continue to move ahead, in spite of concerns over U.S supply. Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed as Asian shares joined a global recovery in equity markets and as worries grew over tensions in the Middle East. U.S. West Texas Intermediate crude for March delivery CLc1 was up 57 cents, or 0.9 percent, at $62.25 a barrel by 0748 GMT, after earlier gaining as much as 1.4 percent to its highest since Feb. 7. London Brent crude LCOc1 was up 38 cents, or 0.6 percent, at $65.22, after rising more than 3 percent last week. Trading is expected to be slower than usual due to market holidays in the United States as well as Greater China. The U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit. [RIG/U] That marked the first time since June that drillers added rigs for four consecutive weeks, and the figure was well up on the 597 rigs that were active a year earlier as energy companies have boosted spending since mid-2016 when crude prices began recovering from a two-year crash. Surging U.S. production is offsetting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia to curb production by 1.8 million barrels per day (bpd) until the end of 2018. Money managers slashed their bullish wagers on ICE Brent crude oil futures by the most in nearly eight months in the week to Feb. 13, data showed, as prices plunged amid concerns of oversupply. Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission The dollar enjoyed a small rebound on Monday as investors bought back the greenback following its plunge to three-year lows. The U.S. currency has been hurt by a variety of factors this year, including concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries start to scale back easy monetary policy.
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Financial Market Review for February 19 2018 Confidence in the dollar has also been shaken by mounting worries over the U.S. budget deficit, which is projected to balloon to $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts. The return of risk appetite last week after a big stock market fall in early February had also been detrimental to the dollar, but on Monday the U.S. currency found its feet as some investors bought the dollar after the recent falls. The dollar index was up 0.1 percent at 89.215, off a low of 88.253 hit last week, which was the weakest level for the U.S. currency since December 2014. Against the euro, the dollar rose 0.2 percent at $1.2399 with traders pointing to crucial business surveys later this week that could give the single currency some more direction. Versus the yen the dollar gained 0.3 percent to 106.58 yen but remained down 2.3 percent this month. The U.S. currency’s outlook remains uncertain in the longer-term, strategists said, particularly as other parts of the world where central banks are tightening policy and economies are strong are looking more attractive for investors. View our full economic calendar for a daily roundup of major economic events.
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