It's "risk-on" this morning as the markets continue to brush aside U.S - China tensions. Economic data later in the day will garner some attention, however.
It was a relatively quiet day on the economic calendar this morning. The Kiwi Dollar was in action, with April trade figures in focus.
Away from the economic calendar, the markets continued to monitor HK and the U.S reaction to China’s security law. Progress of the bill to make it more difficult for Chinese companies to list on U.S exchanges and China’s response also remains a factor.
COVID-19 news and numbers, however, remained supportive, driving market optimism and demand for riskier assets.
Looking at the latest coronavirus numbers,
On Monday, the number of new coronavirus cases rose by 83,824 to 5,582,404. On Sunday, the number of new cases had risen by 101,608. The daily increase was lower than Sunday’s rise, while higher than 82,564 new cases from the previous Monday.
France, Germany, Italy, and Spain reported just 747 new cases on Monday, which was down from 1,470 new cases on Sunday. On the previous Monday, 1,916 new cases had been reported.
From the U.S, the total number of cases rose by 19,790 to 1,706,226 on Monday. On Sunday, the total number of cases had risen by 20,190. On Monday 18th May, a total of 22,231 new cases had been reported.
On the trade front, the trade deficit narrowed from a NZ$3,460m to NZ$2,500m in April. The monthly trade surplus jumped from NZ$722m to a record NZ$1,267m.
According to NZ Stats,
The Kiwi Dollar moved from $0.61011 to $0.60992 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.29% to $0.6121.
At the time of writing, the Japanese Yen was down by 0.14% to ¥107.86 against the U.S Dollar, while the Aussie Dollar was up by 0.24% to $0.6561.
It’s a relatively quiet day ahead on the economic calendar. Germany remains in focus, with May’s GfK Consumer Climate figures due out later this morning.
Expect some influence from the numbers, which will give some indication of whether a service sector-driven economic recovery is feasible near-term.
Global trade terms remain weak, which will likely shift focus to service sector activity near-term. Consumer confidence and consumption will be pivotal in any economic recovery.
At the time of writing, the EUR was up by 0.11% to $1.0910.
It’s another quiet day ahead on the economic calendar. Following Monday’s holiday, expect Brexit and COVID-19 news updates to be the key drivers on the day.
Will there be a surprise decision to agree to a Transition period extension? The current economic environment would support such a move. It would be hard to imagine voters complaining when considering the impact of the COVID-19 pandemic on the UK economy.
At the time of writing, the Pound was up by 0.14% to $1.2208, with risk sentiment providing support.
It’s also a relatively busy day ahead on the U.S economic calendar. Following Monday’s public holiday, May’s consumer confidence figures are due out later today.
A marked pickup would be needed in confidence to support a more optimistic economic outlook. Weekly jobless claims figures suggest that, while an easing of lockdown measures is positive, labor market conditions will weigh.
April’s new home sales and March house prices figures also due out should have a muted impact later today.
Away from the calendar, chatter from the Oval Office and any progress with the bill to toughen rules on Chinese firms listing on U.S exchanges will also influence. There’s also any U.S response to China’s plans for the HK security law to also monitor.
The Dollar Spot Index was down by 0.18% to 99.687 at the time of writing.
It’s a quiet day on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.
Geopolitics and improved market sentiment towards the economic outlook will likely remain the key drivers.
Overnight BoC Governor Poloz spoke of inflation likely to take some time to return to target. Poloz added that the BoC has some flexibility in the time it takes to get inflation back to target. The comments suggested that there would be no monetary policy moves to fuel inflationary pressures.
At the time of writing, the Loonie was up by 0.17% to C$1.3961 against the U.S Dollar.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.