May 16, 2019

Daily Market Review – Thursday, May 16, 2019

Daily Market Review – Thursday, May 16, 2019

Asia

Global indexes have been showing optimism on Trump’s tweet yesterday saying a trade agreement would be signed. This does not seem to be helping China’s economic slowdown despite monetary easing policies, as yesterday’s retail and production numbers painfully show. The Yen continues to attract some – albeit less – risk buyers, while machine orders in Japan yesterday contracted by another 33.4% in April. Amidst the sea of muted green, only the Nikkei and Kospi closed down. And in Australia, unemployment added a tenth to read 5.2% in April. Participation, on the other hand, was up. The AUD plummeted 50 pips on the announcement before quickly regaining a foothold just below its previous 6925 support line as speculation increases for an upcoming interest rate cut.

Europe

With Brexit still on the back burner until the next vote in June, the Euro shortly dipped yesterday after Italy’s Dep PM Matteo Salvini said that his country would flaunt EU debt-budget ratios until the nation could boast a 5% unemployment level. The return to normal came after auto shares in Germany shot up by $2-6 when Bloomberg reported that the White House was delaying tariffs on their industry by 6 months. While French consumer inflation at 1.5% in April came a tad closer to target, industrial sales in Italy failed to impress on the monthly read, but increasing beyond expectations to 1.3% in March. Orders at -3.6% contracted less than expected.

US

The USD yesterday spiked by 40 cents on Trump’s tweets, the Euro auto-delay announcement and Treasury Secretary Mnuchin’s announcement to the effect that an agreement with Canada and Mexico on steel and aluminium tariffs was all but resolved. Data continues to read weakly, April’s retail sales contracting by 0.2% MoM and industrial production by 0.5%. New York’s Empire State Manufacturing index, however, added 7 points to land at 17.8 in May, and the NAHB’s housing index, projecting future sales and construction, added 3 points to 66, apparently on the back of halted interest rate hikes and the consequently expected mortgages increase. The 30-pip spike in the Canadian dollar is being assisted also by OPEC-motivated rising oil prices.

Commodities

Despite yet another 5.43mB increase in Cushing reserves, as reported yesterday by the EIA, oil yesterday completed a 3-day double bottom, launching itself above the $62 mark and currently testing resistance at 62.50 a level tested unsuccessfully 5 times since the month began. This time, the long-awaited Iran-US showdown, para-military attacks on Saudi production and continuing sanctions on Venezuela are providing a heady backwind. Following it’s $15 Monday surge, gold continues to describe a sideways band either side of $1297 per troy ounce. Following yesterday’s data, today’s housing and jobs numbers from the US could force an awakening. And Bitcoin finally breached the tough $8000 resistance level last night, defining what could become a new support level and putting the 7-day surge at 37%. Meanwhile acceptance grows as payment processing startup Flexa offers crypto payments to Barnes & Noble, Office Depot and other bricks-&-mortar retailers. Additionally, bitcoin futures exchange Bakkt has announced plans to offer physically-settled BTC futures. At present, both the CME Group and the Chicago Board Options Exchange offer cash-based futures.

Events

08:00 AM GMT – Italy Consumer Price Index (Apr) and Trade Balance at 09:00
09:00 AM GMT – EU Trade Balance (Mar)
12:30 PM GMT – US Housing Starts, Building Permits (April), Continuing/Initial Jobless Claims (May 10) & Philadelphia Fed Manufacturing Survey (May)
12:30 PM GMT – Canada Manufacturing Shipments (Mar), ADP Employment Change (Apr), and Portfolio Investment in Foreign Securities (Mar)
22:30 PM GMT – NZ Business PMI (Apr), and Producer Price Index (Q1) at 22:45.
00:00 AM (+1) – Australia Consumer Inflation Expectations (May)

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