Financial Market Review for February 12 2018 Asian equity markets were on the rise with a softer U.S Dollar easing the pain through the Asian session. With macroeconomic data on the lighter side, focus will shift to this week’s inflation figures out of the U.S, with politics likely to influence the Pound and the EUR. Economic data through the Asian session this morning was limited to New Zealand’s Electronic Card retail sales figures for January. Following disappointing numbers in December, card sales rebounded in January, rising by 1.4%, which was well ahead of a forecasted 0.5% increase. January’s increase was attributed to a 1.5% increase in card transactions on hospitality, including bars, cafes, restaurants and takeaway shops. There was also a 1.2% increase in card transactions on durable goods and a 1.5% jump in fuel transactions. The Kiwi Dollar found strong support through the early part of the Asian session, rising by as much as 0.3% before easing back to $0.7263, a 0.11% gain for the morning. Elsewhere, the Aussie Dollar was up 0.20% to $0.7829, supported by rising commodity prices, while the Japanese Yen was up 0.12% to ¥108.67 against the U.S Dollar, as the U.S. Dollar softened through the session. In the equity markets, there was some relief for the Hang Seng and China equities on Monday, with the Hang Seng and CSI300 up 0.71% and 1.3% respectively at the time of writing, supported by a 145 point gain in the Dow mini in the early part of the day. It wasn’t such a great start for the ASX200 however, with the big-4 banks in the red, as the Australian royal commission inquiry into Australia’s bank and financial services practices and wrong doings got underway. The ASX200 closed out the day with a 0.30% loss. For the EUR, key stats out of the Eurozone this morning are limited to France’s finalized inflation figures for January. Barring a deviation from prelim numbers, the figures are unlikely to have a material impact on the EUR, which has been in recovery mode ahead of the European open. At the time of writing, the EUR was up 0.22%to $1.2279, with a pullback in the Dollar providing the EUR with this morning’s gains. With negative chatter over the forming of the grand coalition leaving Merkel on the defensive, the NoGroKo movement, aimed at thwarting the grand coalition, could bring a final twist to German politics in the coming weeks and a possible end to Merkel’s run at the helm. For the Pound, Dollar weakness has come at a timely moment, with the Pound up 0.21% to $1.3856 at the time of writing. Focus will continue to be on Brexit over the near-term, with BoE Governor Carney having talked up the prospects of a rate hike last week, whilst saying that much depended upon the outcome of Brexit talks and what kind of transition and trade deal Britain negotiates. The Brexit chatter is certainly not too favourable for the Pound, with talks of a 2nd EU Referendum and even the possibility of another General Election doing the rounds. It’s a poignant time for Theresa May, the Tory Party and Britain, with Theresa May due to deliver a series of speeches to outline the Road to Brexit. A failure to unite the Tory Party could spell disaster for the British PM and the Pound.
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