FINANCIAL MARKET REVIEW FOR JUN 08, 2018 Economic data released through the Asian session this morning included April current account and finalized 1st quarter GDP numbers out of Japan and May trade figures out of China. For the Japanese Yen, there was yet more disappointment following the weak household spending figures released earlier in the week, with the finalized 1st quarter GDP numbers showing a greater contraction than from 1st estimate, affirming the contraction in the economy. Year-on-year, the economy shrank by 0.6%, which was worse than a forecasted contraction by 0.4%. Quarter-on-quarter, the economy shrank by 0.2%, which was worse than a forecasted contraction by 0.1%. There had been some hope that the finalized numbers would be revised upwards, but with domestic consumption dragging, the chances of a recession linger and today’s G7 will certainly have an influence on the outlook for the Japanese economy. With the GDP numbers disappointing, a narrowing in Japan’s current account was also a negative, with the surplus narrowing from ¥3.122tn to ¥1.845tn in April. The Japanese Yen moved from ¥109.741 to ¥109.759 against the Dollar upon release of the figures, before recovering to ¥109.45 at the time of writing, up 0.23% for the session Out of China, the trade surplus narrowed from a revised $28.38bn to $24.92bn, with exports rising by 12.6%, while imports surged by 26%, both coming in well ahead of forecasts. The narrowing of the surplus was not a major issue for the Asian markets, with strong demand for goods and raw materials and stable private sector PMI figures expected to maintain growth, though it will all boil down to progress on trade talks at the G7 today and tomorrow. At the time of writing, the Aussie Dollar was down 0.55% to $0.7582, with the Kiwi Dollar down 0.2% to $0.7014, the commodity currencies in the hands of Trump and other members of the G7. In the equity markets, it was a sea of red, with the tech sector sell-off in the U.S on Thursday spilling over to the Asian session. At the time of writing, the CSI300 and Hang Seng were down 1.34% and 1.96% respectively, with the Nikkei and ASX200 ending the day down 0.56% and 0.2% respectively, the markets in risk off mode through the session. For the EUR, economic data out of the Eurozone this morning included April industrial production and trade figures out of Germany. Industrial production slid by 1% in April, falling short of a forecasted 0.2%, while reversing March’s 1% increase. Germany’s trade surplus narrowed from a revised €21.6bn to €19.4bn in April, as exports fell by 0.3%, while imports increased by 2.2% The EUR slipped from $1.18053 to $1.17842 upon release of yet more soft numbers out of the Eurozone’s economic power house, before pulling back to $1.1777 at the time of writing, down 0.19% for the session, with all eyes now shifting to the G7. The softer numbers out of Germany this morning raises more doubts on whether the ECB will be in any position to bring an end to the QE program this year.
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