Aussie Dollar Makes a Move, While Trade War Jitters Linger

It’s a mixed start to the day, support for the Aussie Dollar kicked in, while the EUR and the Pound could be under pressure. EU elections loom…
Bob Mason
Forex Markets Currency Trading Concept.

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side. Japan’s 1st quarter GDP figures provided direction early on. Later this morning, finalized March industrial production figures are also due out of Japan. Forecasts are for production to fall by 0.9%, which are in line with prelim. Production had risen by 0.7% in February.

For the Japanese Yen,

The Japanese economy grew by 0.5% in the 1st quarter, which was far better than a forecasted 0.1% contraction. Year-on-year the economy grew by 2.1% in the 1st quarter, which was well ahead of a forecast 0.2% contraction.

The economy grew by a revised 0.4% in 4th quarter year-on-year and by a revised 1.6%, year-on-year. According to figures released by Japan’s cabinet office.

  • Imports slid by 4.6%, quarter-on-quarter, while exports fell by a lesser 2.4%, which provided the largest contribution to GDP in the quarter.
  • Private consumption fell by 0.1%.

The Japanese Yen moved from ¥110.123 to ¥110.257 upon release of the figures that preceded the industrial production numbers. At the time of writing, the Japanese Yen was down by 0.13% to ¥110.22 against the U.S Dollar.

Elsewhere,

At the time of writing, the Aussie Dollar was up 0.68% to $0.6915, early support coming off the back of the surprise election result on the weekend. The Kiwi Dollar was also on the rise, up by 0.26% to $0.6536.

In the equity markets, the major indexes were on the move. The ASX200 was up by 1.60% supported by the Federal Election result. At the time of writing, the Nikkei was also up, gaining 0.27% supported by the softer Japanese Yen.

Hitting reverse, however, were the CSI300 and Hang Seng, which were down by 1.02% and 0.51% respectively.

Hopes of a resolution to the extended trade war remain, following news of a conversation between China’s Foreign Minister Yi and Secretary of State Pompeo.

In spite of the lingering hopes that has prevented the global equity markets from sinking, pressure on China and HK stocks remained. News of U.S tech companies halting the supply of software and components to Huawei weighed on tech stocks.

Sunny Optical Tech led the way down on the Hang Seng, down by 4.92% at the time of writing. Tencent Holdings was also deep in the red, down by 2.36%.

The Day Ahead:

For the EUR,

It’s a particularly quiet day ahead on the economic data front. Germany wholesale inflation figures due out later this morning will provide the EUR with direction early on.

Outside of the stats, market risk sentiment will influence through the day.

At the time of writing, the EUR was down 0.03% at $1.1155.

For the Pound,

There are no material stats due out of the UK today.

With EU Parliamentary elections now just days away, the focus will remain on Brexit and chatter from Parliament. There has been talk of another round of indicative votes in Parliament. Theresa May could have another issue on her hands, however, should the Tories have yet another disaster election.

Nigel Farage and the Brexit Party have the lead, according to the latest polls, which is considered a negative for the Pound. Any further Boris Johnson talk will also have an impact.

At the time of writing, the Pound was up 0.06% to $1.2731.

Across the Pond,

There are no material stats scheduled for release later this afternoon.

The lack of stats leaves the focus on the U.S – China trade talks and geopolitical risk in general.

While there are no material stats, FED Chair Powell is scheduled to speak late in the day. Any monetary policy talk will provide direction for the Greenback.

At the time of writing, the Dollar Spot Index was up 0.02% to 98.019.

For the Loonie,

There are no material stats, with the Canadian markets closed for the day. While volumes will be on the lighter side, crude oil prices and market risk sentiment will provide direction through the day.

Gains through the early part of the day came off the back of a jump in crude oil prices early on. Brent and WTI were up by 1.5% and 1.45% respectively, at the time of writing. Early support came from news of OPEC’s latest pledge to continue to limit supply.

The Loonie was up 0.18% at C$1.3434, against the U.S Dollar, at the time of writing.

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