Financial Market Review for March 27, 2018 Macroeconomic data is expected to continue to take a back seat this week as the markets look to China and the U.S to avoid a trade war that may well end in disaster for both sides and the global economy. The USD has taken the brunt of the negativity, with the equity markets moving ahead on hopes of a resolution to trade disputes. Economic data through the Asian session this morning, was on the lighter side, limited to February new home sales figures out of Australia. New home sales fell by 0.7% in February, following the 2.1% fall in January, to make it the 2nd consecutive monthly decline. According to the HIA, the declines have been attributed to tighter lending policies, particularly on investment properties, and a pullback in overseas buyers. The Aussie Dollar moved from $0.77547 to $0.77528 upon release of the figures, before falling further back at the time of writing, up 0.18% to $0.7734, while the Kiwi Dollar slipped 0.11% to $0.729, with U.S Dollar finding some support through the early part of the day pinning back the majors and some profit taking weighing on the Kiwi Dollar, following Monday’s 0.9% rally. The stats had limited impact however, as the markets played catch up though the Asian session, with the Japanese Yen the biggest loser through the session, falling 0.23% to ¥105.65 against the U.S Dollar at the time of writing, as market fears of a trade war eased through the U.S session. News hit of the U.S administration already in talks with China was the market positive, the Chinese government having reached out in the interest of averting a trade war. In the equity markets, the ASX200 closed out the day up 0.72%, with the Nikkei up 2.27% ahead of the close, while the CSI300 and Hang Seng were up 0.88% and 0.86% . U.S. stock futures pointed to more gains for markets Tuesday, as concerns about a global trade war continued to dissipate. Dow Jones Industrial Average futuresYMM8, +0.56% rose 122 points, or 0.5%, to 24,313, while S&P 500 futuresESM8, +0.49% gained 11.75 points, or 0.4%, to 2,670.75. Nasdaq-100 futuresNQM8, +0.82% added 37.75 points, or 0.6%, to 6,810.50. All three major benchmarks logged their best one-day gains since August 2015 on Monday, with the DowDJIA, +2.84% climbing 669.40 points. Those gains were on the heels of the biggest weekly decline in more than two years. Stocks also saw sizeable gains across Asia, led by a 2.3% gain for the Nikkei 225 index NIK, +2.65% Across other assets, gold pricesGCK8, -0.01% slipped modestly, while oil CLK8, +0.26% prices rose and the ICE Dollar Index DXY, -0.46% was flat. For the EUR, economic data scheduled for release this morning includes prelim March inflation figures out of Spain, jobseeker numbers out of France, with Eurozone private sector loan numbers and business and consumer confidence figures also scheduled for release. While focus will be on the inflation numbers, we will expect the less material stats to also provide direction through the morning, with business and consumer confidence key to driving the economy, though the surveys may have been completed before the EU’s exemption on steel and aluminium tariffs, which could give misleading signals. Whether the stats will have the final say remains to be the seen, with the market’s negative sentiment towards the U.S government and the threat of a trade war having seen the EUR rally to $1.24 levels.
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Financial Market Review for March 27, 2018 Adding to the upside in the EUR has been some chatter of a possible shift in ECB policy on interest rates next year, though with the EUR at $1.24 levels, certain members of the ECB may look to downplay such suggestions over the near-term. At the time of writing, the EUR was up 0.06% to $1.2465, with the overnight rally in the U.S equity markets likely to provide some respite for the EUR this morning, though with the Dollar sitting in Trump’s pocket, the Oval Office will continue to be the key driver for the major pairings for now. For the Pound, it’s a quiet day on the data front, leaving general sentiment towards the UK economy, monetary policy and Brexit to continue to provide direction, the combination of which has served the Sterling bulls well over the last week. The Pound’s move through to $1.42 levels have been impressive, when considering the fact that the Pound was languishing at $1.38 just a couple of weeks ago. At the time of writing, the Pound was down at $1.4180, with Trump and Brexit chatter key considerations through the day. Across the Pond, key stats scheduled for release this afternoon include March’s CB Consumer Confidence figures, together with Redbook figures. Based on forecasts, the consumer confidence numbers are expected to provide the U.S Dollar with some much needed support, assuming that there is no negative news from the U.S administration later today on ongoing discussions with China on trade. Economic data may have improved in the last week, with this afternoon’s consumer confidence figures also scheduled to be a positive, but the U.S administration’s approach to foreign policy and international relations has the markets and perhaps even the world leaders somewhat perplexed. The unpredictability of the U.S administration’s actions will likely continue be an issue for the Dollar bulls and until there is a clear agreement between China and the U.S on any trade talks, support for the Dollar will continue to be on the choppier side near-term. At the time of writing, the Dollar Spot Index was up 0.04% to 89.066, with today’s consumer confidence and Redbook figures and of course, any trade tariff chatter by the U.S or China the key drivers through the day. Oil prices edged up on Tuesday, supported by concerns that tensions in the Middle East could lead to supply disruptions. Hopes that behind-the-scenes talks between the United States and China will prevent a looming trade war between the world’s two biggest economies also supported global markets, including crude oil futures. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $65.69 a barrel at 0602 GMT, up 14 cents, or 0.2 percent, from their previous close. Brent crude futures LCOc1 were at $70.20 per barrel, up 8 cents, or 0.1 percent. Iraq, the second biggest producer within the Organization of the Petroleum Exporting Countries (OPEC) said on Monday that it also supports the producer cartel’s agreement to cut oil output.
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Financial Market Review for March 27, 2018 OPEC, together with a group of non-OPEC producers led by Russia, started withholding production in 2017 in order to prop up prices. The deal to cut is scheduled to last through 2018, and there has been recent support by OPEC’s de-facto leader Saudi Arabia to extend the cuts into 2019. However, some traders cautioned that such a moved faced opposition. View our full economic calendar for a daily roundup of major economic events.
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