FINANCIAL MARKET REVIEW FOR MAY 18, 2018 It was a relatively quieter day through the Asia session this morning, with economic data limited to April inflation figures out of Japan. April’s annual core rate of inflation stood at 0.7%, falling short of a forecasted 0.8%, whilst easing from March’s 0.9%, with headline consumer inflation falling by 0.4% month-on-month. The monthly decline was attributed to falling food prices (-1.0%), which were partially offset by rising prices for clothes and footwear (+2.0%). The core annual rate of inflation came in softer as a result of a 0.2% fall in prices for housing and a 1.5% fall in prices for furniture and household utensils. Offsetting the softer numbers were rises in prices for medical care (+1.9%), transportation and communication (+1.1%) and fuel, light and water charges (+3.6%). As far as the BoJ and Abenomics is concerned, it’s yet another blow in the wake of the contraction in the Japanese economy in the 1st quarter and the quite dire core machinery order numbers released on Thursday. The Japanese Yen moved from ¥110.809 to ¥110.83 upon release of the figures before easing to ¥110.93 against the Dollar at the time of writing, down 0.14% for the morning, any appetite for the safe haven over concerns of a rise in tension between the U.S and North Korea certainly not reflected in the Yen, which has been one of the worst performers for the current week and for good reason. Elsewhere, the Aussie Dollar was up 0.04% to $0.7514 in what’s been a choppy week, while the Kiwi Dollar was up 0.20% to $0.6892 at the time of writing, playing catch up. The pair have had a tough week and rising U.S Treasury yields have certainly done the job, though the Kiwi has had it worse this month, a particularly dovish RBNZ that was in stark contrast to an RBA wanting to sit back through the year, doing most of the damage. In the equity markets, there was some positive momentum for the Nikkei in the wake of the Thursday losses in the U.S, off the back of a softer Yen, while the Hang Seng and CSI300 are having a choppy session and ASX200 in negative territory at the time of writing, the markets responding to comments over the U.S – China trade negotiations, which dampened any hopes of progress this week. For both the Hang Seng and ASX200, it’s been the energy sector leading the way, as Brent crossed over to $80 on Thursday and was knocking on the door again this morning. The U.S futures were in positive territory through the session providing support. For the EUR, economic data scheduled for release is limited to April producer price figures out of Germany and the Eurozone’s March trade figures that will provide some direction, though unlikely to be enough to reverse the week’s losses, the EUR desperately trying to hold on to $1.18 levels. At the time of writing, the EUR up 0.09% to $1.1806, some profit taking from the upside in the Dollar contributing to the morning’s moves, with things continuing to look precarious for the EUR bulls, the news wires likely to also be busy delving into the new anti-EU Italian government. For the Pound, there are no material stats scheduled for release through the morning to provide direction for the Pound that found some support from Brexit news on Thursday.
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FINANCIAL MARKET REVIEW FOR MAY 18, 2018 The support was relatively short lived however, with the Pound moving back to test sub-$1.35 support levels, the Brexit road still a long and windy one, with sentiment towards the economy and monetary policy a drag. At the time of writing, the Pound was down 0.04% to $1.3511, with Brexit chatter the key driver through the day, any further positive news likely to provide some short-term gains. Across the Pond, there are no material stats scheduled for release out of the U.S, leaving the Dollar in the hands of the FOMC, members Mester, Brainard and Kaplan scheduled to speak through the day, with any hawkish commentary likely to support further upward momentum in yields. At the time of writing, the Dear DollarMr.Benitez, Spot Index was up 0.03% to 93.498, with FOMC member commentary and the Oval Office the key drivers through the day, Treasury yields needing a watchful eye through the day. Across the border, the Loonie is in action this afternoon, with April retail sales and inflation figures scheduled for release that will certainly provide direction, forecasts being Loonie positive. Outside of the stats, there will also be NAFTA talks to consider, though news hitting the wires are pointing to an agreement by the end of the month, the Thursday deadline having passed. At the time of writing, the Loonie was down 0.12% to C$1.2823 against the U.S Dollar, support from crude oil prices alone not enough to hold back a reversal through the morning, with Bank of Canada policy hinged on a positive outcome to NAFTA talks that no leaves the market in limbo for a while longer. The online HTML, CSS and JS cleaner will take care of your dirty web code. They are all free online programs. View our full economic calendar for a daily roundup of major economic events.
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