The Kiwi was apparently the main beneficiary of Macron’s victory in the French Presidential elections, thanks to the resulting risk-on vibes. The euro, meanwhile, gapped higher during the pre-Tokyo open, but weakened and then steadied during the actual Tokyo session. As for the pound, it encountered selling pressure, likely because of Macron’s tough stance on Brexit.
Another currency worth noting is the Aussie since it had decent two-way action, likely because bulls were trying to buy up the Aussie due to the risk-on vibes while bears took cues from the slide in iron ore prices.
- Australian building approvals m/m: -13.4% vs. -3.9% expected, 8.9% previous
- NAB’s Australian business confidence: 13 vs. 6 previous
- ANZ Australian job ads m/m: 1.4% vs. 0.6% previous
- Chinese trade balance: CNY 262B vs. CNY 197B expected, CNY 164B previous
- Japanese consumer confidence: 43.2 vs. 44.3 expected, 43.9 previous
Mixed Australian data
Australia released a set of economic reports today and they were mixed but net positive overall.
First on the lineup was the number of building approvals in Australia during the March period. And unfortunately, that plunged by 13.4% month-on-month to 16,484 units. This is the hardest monthly drop since September 2013 and will likely be a drag on Q1 2017 GDP. Year-on-year, this translates to a 19.9% slump.
There’s a bit of a silver lining, though, in that the drop does ease some jitters over Australia’s housing market problems that the RBA has been pointing out recently.
Moving on, NAB’s Australian business confidence index jumped from 6 index points to 13 in April, which is the highest reading since 2010, as well as “more than double the long-run average for the series.” According to NAB, “Confidence levels vary across industries, but all are currently positive, even in trend terms.” Great! In addition, business conditions also improved from 12 index points to 14 in April.
Finally, ANZ reported that job advertisement jumped by 1.4% in April while the reading for March was upgraded from +0.3% to +0.8%. This may be a sign that the Australian labor market is still strong.
Macron projected to be the next French President
With around 98% of the votes already in, centrist and pro-EU candidate Emmanuel Macron has captured around 65.8% of the votes while his anti-EU rival, Marine Le Pen, only has 34.2%. This means that Macron is now pretty much gonna be the next President of France.
Aside from being a pro-EU fellow, which makes him the status quo candidate, Macron is also expected to take a hard stance on Brexit. And that’s not just mere speculation or a conclusion by political analysts, because back on February 14, Macron lambasted Brexit and threatened to give the U.K. a hard time as follows:
“If your government decides to organise a Brexit I will be pretty tough on it. We have to preserve the rest of the European Union and not to convey the message that you can decide to leave without any consequence.”
“It’s not to be punished but to be consistent with such a decision. You don’t get the passport and you don’t get access to the single market when you decide to leave.”
“It cannot be a game where the Brits can maximise their interests without taking into consideration the EU’s.”
“I don’t want a tailor-made approach where the British have the best of two worlds. That will be too big an incentive for others to leave and kill the European idea, which is based on shared responsibilities.”
Gloomy start for iron ore
It looks like last week’s iron ore plunge won’t be letting up this week, given that Dalian iron ore prices got shaved by 0.4% to 465.50 yuan ($67) per dry metric ton during today’s Asian session.
Market analysts are still pinning the blame on higher inventory levels and lower demand from steel mills. Chinese steel prices rose during the session, though, limiting losses on iron ore.
Risk-taking in Asia-Pacific
Risk appetite was the dominant sentiment in Asia, causing most Asian equity indices to rise, although mainland Chinese equities were an exception.
- ASX 200 up by 0.50% to 5,864.90
- The Shanghai Composite was down by 0.60% to 3,084.34
- Hang Seng was up by 0.48% to 24,593.00
- The Nikkei Index was up by 2.41% to 19,914.00
- KOSPI was up by 1.81% to 2,281.83
Market analysts were quick to link the risk-on mood to relief buying after Macron won the French presidential elections during the weekend.
Major Market Mover(s):
The resulting risk-on vibes from Macron’s victory in the French Presidential elections apparently gave the Kiwi a bullish boost.
NZD/USD was up by 29 pips (+0.42%) to 0.6928, NZD/JPY was up by 42 pips (+0.54%) to 78.14, NZD/CAD was up by 26 pips (+0.27%) to 0.9455
The euro gapped higher when the new trading week opened but before the Tokyo session proper rolled around. During the actual Tokyo session, the euro slid lower, filling the gaps, very likely because of profit-taking by some euro longs. Bulls were beginning to charge in by the end of the session, though, so the euro may be getting its second wind soon.
EUR/USD gapped higher by 13 pips (+0.14%) to 1.1011 but closed the session down by 5 pips (-0.05%) to 1.0992, EUR/JPY gapped higher by 40 pips (+0.32%) to 124.25 but closed the session up by 12 pips (+0.10%) to 123.98, EUR/NZD gapped higher by 70 pips (+0.44%) to 1.5942 but closed the session down by 10 pips (-0.07%) to 1.5862
Macron’s victory was good for the Kiwi and the euro (initially), but it wasn’t good for the pound because Macron has shown his hostility towards Brexit and the U.K. in the recent past.
GBP/USD was down by 16 pips (-0.12%) to 1.2967, GBP/CAD was down by 31 pips (-0.17%) to 1.7696, GBP/NZD was down by 78 pips (-0.42%) to 1.8710
Watch Out For:
- Victory day holiday in France
- 6:00 am GMT: German factory orders (0.7% expected, 3.4% previous)
- 7:30 am GMT: Halifax U.K. HPI (0.1% expected, 0.0% previous)
- 8:30 am GMT: Sentix Euro Zone investor confidence (25.3 expected, 23.9 previous)