The US$ was mixed on Friday, generally firm against Euro, where Italian and also Spanish politics continue to weigh it down, causing another move into safe-haven assets, sending EurJpy and EurChf sharply lower. Sterling, was also weighed down by politics, particularly after BOE Governor, Mark Carney said that additional stimulus may be needed in the event of a bad Brexit deal.
Stocks were a little lower (-0.25%) too, not helped by the sharp selloff in the WTI price (-4.5%), which hurt the energy sector. The selloff came about on signs of increasing US oil expansion and reports that OPEC and its allies could lift output in order to counter a supply shortage from Iran and Venezuela. Gold and Silver were slight lower but generally sidelined. US yields took another hit and closed the week at levels seen in mid December – at 94.25.
Over the weekend, further developments in the Korean situation means that the Trump/Kim meeting may now be back on, while Italy has been plunged into fresh political turmoil after prime minister-designate Giuseppe Conte formally rejected a mandate to form a new populist government. In early trade, the Euro has gapped a little higher, although that may not last long if the Italian political woes continue, while US$Jpy and the AUD$ are also a little firmer.
In terms of data, the US Durable Goods Orders Order fell by 1.7% April, although the poor reading stemmed almost entirely from a decline in contracts for Boeing planes. Most businesses took in more orders and increased investment last month, so overall it looks to be fairly mixed reading.
It is going to be a busy week ahead with most of the focus being on the latter half of the week, when the April US Personal Consumption/Expenditure (Thur) and the May Jobs/NFP/Average Hourly Earnings (May) data will be released. Before then today should be quiet, with both the UK and the US on holiday, and no data on the calendar, either. Tuesday will also see a thin calendar, while Wednesday will be busier with the release of the German CPI/HICP for May, as well as the US Q1 Preliminary GDP. Thursday will feature the EU CPI, while Friday, aside from the NFP will also see both the Markit and ISM Mfg PMIs. Have a good week.
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