FINANCIAL MARKET REVIEW FOR JUL 20, 2018
Economic data released through the Asian session this morning was on the lighter side, with stats limited to inflation numbers out of Japan. For the Japanese Yen, core consumer prices rose by 0.8%, year-on-year, which was in line with forecasts, whilst seeing an uptick from May’s 0.7%, while month-on-month consumer prices rose by just 0.1%, rising at the same pace as in May. The pickup in annual core rate of inflation was attributed to a 3.3% increase in charges for fuel, light and water, a 2% rise in prices for medical care and a 1.4% rise in prices for transportation and communication, with smaller rises in prices being seen for education and culture and recreation. Pinning back the baseline figures were a 1% fall in prices for furniture and household utensils and a 0.1% fall in prices for housing, with prices for clothes and footwear flat. The Japanese Yen moved from ¥112.442 to ¥112.427 against the Dollar, upon release of the figures, before moving to ¥112.35 at the time of writing, up 0.11% for the session, the inflation figures providing little reason for the BoJ to shift on its particularly accommodative policy stance any time soon, while risk sentiment gave the Yen some support Elsewhere, the Aussie Dollar was on the back foot, down 0.08%, weighed by sliding metal prices, while the Kiwi Dollar found support, rising by 0.1% to $0.6750 ahead of a busy week on the data front next week. In the equity markets, the ASX200 was on the move gain, gaining 0.38% to add to the week’s tally, while the Nikkei, Hang Seng and CSI300 saw red, the CSI300 heading for a 5th consecutive day of losses and the Hang Seng a 4th as the market continues to fret over the ongoing trade war and failure to make progress on finding a resolution. For the EUR, key stats through the day are limited to wholesale price inflation numbers out of Germany that are unlikely to have a material bearing on the EUR through the day. With the EUR having pulled back to $1.15 levels on Thursday, before recovering, we can expect some volatility as the markets assess whether Trump’s comments on interest rates can influence an independent central bank and more importantly, from a EUR perspective, whether trade tariffs on the auto sector are around the corner. For now the EUR bulls are blessed with the knowledge that the U.S President despises a strong Dollar and goes out of his way to limit any upside, but there is a sense of inevitability about the EUR, particularly if Trump doesn’t get his way with Juncker next week. At the time of writing, the EUR was up 0.08% to $1.1651, with geo-political risk the key driver, trade tariff chatter in focus. For the Pound, there are no material stats scheduled for release through the day and, following 3 consecutive days of data that could ultimately lead to the BoE doing an about turn on an August rate hike, with some respite likely to be welcomed. The lack of data doesn’t mean a lack of stress however, with a removal of the Pound’s safety net giving Brexit and UK politics a greater influence near-term, Theresa May’s position at the top continuing to look precarious at best. When considering the June retail sales figures released on Thursday, if the football world cup and a summer heat wave were not able to boost spending, one has to wonder what’s to come in July…
vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com
FINANCIAL MARKET REVIEW FOR JUL 20, 2018
At the time of writing, the Pound was up 0.05% to $1.3021, with Brexit chatter and a shift in sentiment towards BoE monetary policy to provide direction through the day. Across the Pond, there are no material stats scheduled for release out of the U.S this afternoon, leaving the Dollar firmly in the hand of the U.S President. The latest threat of tariffs on the EU will add to the increased demand for U.S Treasuries, with the U.S President showing an unwillingness to waver on the trade war, turning the screw not just on major trading partners, but on the U.S itself. A pullback on Thursday, following Trump’s statement of dislike on rising interest rates was a further reflection of just how jittery the markets can be over what Trump does and, perhaps more significantly, what he is capable of doing. The FED’s independence is paramount and never more so, when considering the U.S government’s debt profile. Trump alone is not going to be able to change that, well one would think so… At the time of writing, the Dollar Spot Index was down 0.05% to 95.117, with direction through the day hinged on noise from the Oval Office. For the Loonie, it’s a big day on the data front, with retail sales and inflation figures scheduled for release. Following BoC Governor Poloz’s views on trade wars and monetary policy, inflation is forecasted to see an uptick in June, with retail sales also expected to bounce back in May, following some weakness in April. Numbers in line with or better than forecasted could see the Loonie make a move back through to C$1.31 levels on the day, with $1.30 levels in sight, though the U.S administration could influence should there be any negative chatter on NAFTA or talk of hitting Canada with more tariffs in response to Canada’s latest retaliatory moves. At the time of writing, the Loonie was up 0.08% to C$1.3262 against the U.S Dollar.
vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com