FINANCIAL MARKET REVIEW FOR JUN 29, 2018 Economic data released through the Asian session this morning was on the heavier side, with key stats including May building consents out of New Zealand, prelim May industrial production, jobs / applications ratio numbers and June core inflation figures out of Japan, with May new home sales and private sector credit figures out of Australia. For the Kiwi Dollar, May building consents were released in the early hours, with consents surging by 7.1% to more than reverse April’s revised 3.7% slide. NZ Stats reported that: Auckland saw the highest number of consents since late 2002. Total consents for houses only rose by 6.5%. Year-on-year, new home consents were up 6.5% in NZ and by 18% in Auckland. The Kiwi Dollar moved from $0.67491 to $0.67524, before rising to $0.6766 at the time of writing, a gain of 0.10%, supported by the positive numbers and improved risk sentiment through the morning. For the Japanese Yen, The Job / Applications ratio improved rose from 1.59 to 1.60 in May, coming in ahead of a forecasted 1.59, to reach its highest level since 1974, which is good news for the government and BoJ who have been looking for upward pressure on wage growth to drive spending and inflation. Tokyo core consumer prices rose by 0.7% year-on-year in June, coming in ahead of a forecasted 0.6% rise, following May’s 0.5% increase. Driving consumer prices was a 3.2% rise in the prices for fuel, light and water charges and a 2.3% rise in prices for medical care, with prices also on the rise for culture and recreation (+1.5%); education (+0.8%) and transportation and communication (0.3%), with miscellaneous also up 0.7%. Prices for furniture and household utensils was the only drag, down 0.3%. While this was good news on the inflation front from the BoJ, fuel price rises were the primary contributor, which may not be sustainable. The Yen moved from ¥110.469 to ¥110.454 against the Dollar upon release of the figures, which came before the release of prelim industrial production figures later in the morning. Month-on-month, industrial production fell by 0.2% in May, according to prelim figures, which was better than a forecasted 1.1% fall, following April’s 0.5% rise, the fall being the first since February’s 6.8% slide. Industries that contributed to the decrease were transport equipment, iron and steel and electrical machinery. Industries that saw an increase in production were electronic parts and devices, general purpose, production and business orientated machinery and information and communication electronics equipment. For the month of June, industrial production forecasts were increased from 0.3% to 0.8% from April forecasts, with industrial production forecasted to rise by 0.8% in July According to the Ministry of Economy, Trade and Industry, industrial production is picking up slowly, following the lower than expected fall in May and positive forecasts for June and July. The Yen moved from ¥110.484 to ¥110.503 against the Dollar upon release of the figures, before easing to ¥110.71 at the time of writing, down 0.20% for the session.
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