Swissquote - Analytics


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    Disappointing Chinese trade date

    Market Brief

    G10 Advancers and Decliners vs USD
      NOK 0.17
      CHF 0.15
      SEK 0.04
    EUR -0.01  
    DKK -0.02  
    NZD -0.07  
    AUD -0.16  
    CAD -0.17  
    GBP -0.26  
    JPY -0.43  
    Global Indexes Current Level % Change
    Nikkei 225 Index 16216.03 0.67
    Hang Seng Index 20178.83 0.34
    Shanghai Index 2832.48 -2.77
    FTSE futures 6124 0.59
    DAX futures 9939.5 0.63
    SMI Futures 7733 0.72
    S&P future 2053.3 0.02
    Global Indexes Current Level % Change
    Gold 1279.73 -0.63
    Silver 17.39 -0.47
    VIX 14.72 -7.45
    Crude wti 45.5 1.88
    USD Index 93.81 -0.08


    Risk appetite was mixed in the Asian session as Tokyo returns from the Golden Week holiday, but trading lacked conviction. USD was marginally stronger after a somewhat disappointing NFP read on Friday and shift in Fed Fund futures that suggest a close to zero probability of a June rate hike. The recovery in USD could reflect that IMM data, which indicated that USD speculative shorts were at their the highest since February 2013. USDJPY rallied continuing to reach 107.69, while EURUSD traded in a tight 30 pip range between 1.1380 and 1.1413. The weaker JPY supported demand in Nikkei which rose 0.80%. The rest of Asia was mixed as the Hang Seng rose 0.41% and the Shanghai composite fell -2.45%. Commodities prices were slightly higher, supported by crude oil which rose 2% to $45.95 as wildfires in Canada threaten supply. In the Philippines, presidential elections will be held today. The front runner Rodrigo Duterte’s (provocative mayor of Davao City) populist approach to financial markets has unnerved bond investors and the election could worsen market sentiment. In Australia, April job ads data was weak printing at -0.8% m/m newspapers -6.2% and internet -0.7%, providing further indication of cooling of labor markets. On the political front, Australian Prime Minister Malcolm Turnbull dissolved both houses of parliament and confirmed a double dissolution election to be held on July 2. The political uncertainty generated from this move, combined with clear evidence of economic weakness and complex issues such as immigration should add additional selling pressure on AUD.

    Mixed data was released from China. April FX reserves rose $3.22trln, above an expected $3.20trln, from March $3.21trln. Although a majority of the increase was due to valuation effects, especially the drop in USD, this result should be viewed as positive for China. FX reserves rose for the second month, indicating that fears of destabilising capital outflows are subsiding. The read should provide markets with additional confidence in the Chinese economy. Chinese house prices continue to trend higher, which will provide domestic investors with an asset to invest in without leaving. Slightly less optimistic was the foreign trade data which disappointed in April after a strong improvement in March. Exports declined -1.8% y/y and shrinkage in imports extended to 10.9% y/y in USD terms. Key for the direction of commodity prices the volume growth of commodity imports declined. Crude oil import fell to 7.6% y/y in April from 21.6% in March. The decline in export growth was driven by falls in demand from the US (-9.3% ) and Japan (-11.8%), while exports to EU and Asia were strong.

    On the calendar today traders will get German factory orders, UK home prices and Euroarea Sentix investors’ confidence. With images of Greek protests dominating the weekend news cycle after the passing the pension and tax reform measures, the Euro-area financial ministers will hold an emergency meeting to discuss additional austerity measures for Greece in case budget targets are missed. It is unlikely that these images will not influence the UK's “Brexit “ debate. GBP continues to come under selling pressure after short term bullish recovery.

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