The US$ is firm heading into Friday trade, underpinned by some better than expected housing data, falling jobless claims and a large Philly Fed beat (@ 16.6 vs expectations of 9.0), allowing US yields to rise slightly, and lending some support to the dollar. Stocks and oil were also up, while the metals were under downside pressure. Stocks were lent a hand by improved corporate results from Wal-Mart and Cisco. Oil rose on the back of unproven Saudi accusations that Iran ordered this week’s attack by Yemeni rebels on a key oil pipeline, stoking concerns that the region is edging toward another war. This came about despite an inventory build of six million barrels of crude in US storage last week, with the International Energy Agency still suggesting that there is currently an oversupply despite six months of OPEC cuts – Expect more choppy conditions I suspect.
In the FX markets, the main loser was the Australian dollar, which is under pressure following yesterday’s jobs data, and the stars seem to be lining up for a rate cut, sooner rather than later. The Aud$ took the Kiwi with it, and lower levels look likely for both currencies. The other loser has been Sterling, which fell for the 9th consecutive day on heightened political and Brexit concerns. The UK PM May has promised to lay out her exit strategy and is now seen leaving the job in June, after the next vote on Brexit. Nn more bad news for the UK, Boris Johnson has announced he will stand for the leadership – no wonder Sterling is lower! Elsewhere, as negative risk sentiment dissipates, in line with the stronger stocks/lower metals, the Jpy is softer on Friday, allowing the dollar to currently trade towards session highs, albeit capped by 110.00. Negative risk sentiment could return at any time –most likely in line with the next POTUS Tweet on trade, so a nimble stance is required. The Euro remain heavy, weighed down by ongoing Italian political/budget concerns.
Looking ahead, Friday will see the NZ April Business PMI (exp 54.5), Q1 PPI (exp Output/Input;1.3%/1.4%) and the May, Australian Consumer Inflation Expectations. Later on, Europe gets to see the April CPI (CPI, Core; exp 0.9%mm, CPI 1.7%mm) and Construction Output (exp -0.8%mm %), while the US will end the week quietly, with just the Michigan Consumer Sentiment Index (exp 97.5) on the agenda. Have a good weekend.
Economic data highlights will include:
Fri: NZ April Business PMI, Q1 PPI, Australian Consumer Inflation Expectation, German Wage Price Index, EU April CPI, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count
Market moves, in brief:
FX: DXY 97.83 (+0.28%)
Bonds: US10Y; 2.395% (+0.84%), German 10Y; -0.095% (+3.15%), UK 10Y; 1.074% (+0.64%), Australian 10Y; 1.651% (-3.14%), NZ 10Y; 1.795% (-0.83 %), China 10Y; 3.290% (+0.01%)
Stock Indices: DJI; +0.84%, S+P; +0.89%, NASDAQ; +0.97%, EUStoxx50; +1.56%, FTSE100; 0.78%, Shanghai Composite; +0.58%,
Metals: Gold $1286 oz (-0.73%), Silver $15.46 oz (-1.61%), Copper $2.7485 lb (+0.04%), Iron Ore $96.13 per tonne (NYMEX) (+1.38%),
Oil: WTI $ 63.10 pb (+1.63%)
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