Financial market review for may 15, 2018

FINANCIAL MARKET REVIEW FOR MAY 15, 2018 After a quiet start to the week, stats released through the Asian session this morning included April industrial production, fixed asset investment and retail sales figures out of China, together with Japan’s tertiary industry activity index, while the RBA also released its meeting minutes from the May meeting.

For the Aussie Dollar, the RBA meeting minutes provided few surprises following the start of the month’s rate statement, with members of the board agreeing that there was no reason for a near-term shift in monetary policy, while noting that the next move would likely be up rather than down, as had been stated within the rate statement.

Both wage growth and inflation have come in on the softer side through the first quarter, pinning back any expectations of a move until next year, with focus now shifting to tomorrow’s 1st quarter wage growth figures and April employment numbers due out on Thursday.

The Aussie Dollar slipped from $0.75323 to $0.75239 upon release of the minutes before recovering to $0.75315 ahead of China’s April stats.

Out of China, the numbers were mixed, with industrial production rising by 7%, coming in ahead of a forecasted 6.3%, following March’s 6% rise. Fixed asset investment and retail sales figures were on the softer side however, fixed asset investment rising by 7%, down from March’s 7.5%, with retail sales rising by 9.4%, down from March’s 10.1% rise, both sets of numbers falling short of forecasts.

The Aussie Dollar moved from $0.75323 to $0.75294 upon release of the figures, before recovering to $0.7529 at the time of writing, up 0.04% for the session.

For the Japanese Yen, the Tertiary Industry Activity Index disappointed, falling by 0.3% in March to reverse February’s upwardly revised 0.1% rise, while also falling more than a forecasted 0.2%.

Industries that contributed to the decline included finance and insurance (-3.2%); information and communications (-1.3%); and electricity, gas, heat supply and water (-4.7%), while business-related services (+2.7%) and wholesale trade (+0.8%) offset some of the downside, other industries seeing minor changes in the month.

The Japanese Yen moved from ¥109.837 to ¥109.871 against the Dollar, upon release of the figures, before recovering to ¥109.74 at the time of writing, down 0.07% for the day.

While the Aussie Dollar was in positive territory at the time of writing, the Kiwi Dollar continued to be pegged back to sub-$0.70 levels, down 0.20% to $0.6899, with no material stats out of New Zealand ahead of 1st quarter wholesale inflation figures on Thursday to reverse the negative sentiment from last week’s RBNZ policy decision and outlook. In the equity markets, it was a day of caution, the Hang Seng down 0.9% to reverse some of Monday’s gains, with the CSI300, ASX200 and Nikkei also in the red at the time of writing, For the EUR, it’s a busy day ahead with economic data out of the Eurozone including Germany and the Eurozone’s 1st quarter GDP numbers, the Eurozone’s March industrial production figures, May economic sentiment numbers out of Germany and the Eurozone and 1st quarter nonfarm payroll and finalized April inflation figures out of France.

vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com

FINANCIAL MARKET REVIEW FOR MAY 15, 2018 Focus will likely be on Germany’s 1st estimate GDP numbers and May economic sentiment figures, with any weaker than forecasted GDP numbers likely to weigh on the EUR ahead of today’s stats out of the U.S. Outside of the data, the EU will also be meeting Iran’s foreign minister today to discuss how to keep the nuclear agreement alive following the U.S withdrawal. While the U.S does not import crude oil from Iran, how the U.S administration responds to the EU’s willingness to keep the deal alive will be key, the administration having already stated that the U.S would introduce sanctions on European companies that continue to do business with Iran.

At the time of writing, the EUR was down 0.04% to $1.1930, the EUR in the hands of today’s stats, noise over the Iran nuclear agreement and updates from the U.S on trade talks with China.

Dear Mr.Benitez, For the Pound, wage growth and employment figures are in focus, any possible upside for the Pound now reliant on positive numbers that could shift market sentiment towards BoE monetary policy.

For any near-term move, economic data out of the UK is going to need to impress and today’s figures are amongst the key numbers that the BoE will consider in the months ahead before any move, with Brexit the other driver that has failed to provide support to the Pound of late.

At the time of writing, the Pound was up 0.08% to $1.3550, with softer average earnings plus bonus numbers forecasted that could see a pullback in the Pound later this morning should claimant counts also disappoint.

Across the Pond, it’s a busy day for the Dollar, with key stats through the U.S session including March business inventories, April’s retail sales figures and NY state manufacturing numbers for May. While we would expect the Dollar to respond to all of the data this afternoon, retail sales will be the key driver on the data front, while trade talks with China, progress on NAFTA and any talk of sanction on European companies also a factor to consider, the Oval Office ever present when considering direction for the Dollar.

At the time of writing, the Dollar Spot Index was up 0.22% to $92.79, recovering from early losses, with forecasts for today’s stats favouring the Dollar, though it’s not just today’s stats that will provide direction, FOMC voting member Kaplan also scheduled to speak.

Across the border, with no material stats scheduled for release out of Canada, focus will remain on NAFTA talks, the news wires suggesting that this Thursday’s extended deadline could be missed, while the respective heads of state were reported to have been in discussion overnight to wrap up talks At the time of writing, the Loonie was down 0.05% to C$1.2795 against the U.S Dollar, with NAFTA news the key driver through the day.

View our full economic calendar for a daily roundup of major economic events.

vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com