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The Aussie and the Kiwi initially outperformed, thanks to the commodities rally. However, the Loonie later joined the fray on the oil cut deal extension announcement. Meanwhile, North Korea jitters and returning risk-on vibes very likely sapped the yen’s strength during today’s Asian session.

  • New Zealand’s retail sales q/q: 1.5% vs. 1.1% expected, 0.6% previous
  • New Zealand’s core retail sales q/q: 1.2% vs. 0.9% expected, 0.7% previous
  • Japanese PPI y/y: 2.1% vs. 1.8% expected, 1.4% previous
  • Australian home loans m/m: -0.5% vs. 0.0% expected, -0.8% previous
  • Chinese industrial production y/y: 6.5% vs. 7.0% expected, 7.6% previous
  • Chinese retail sales y/y: 10.7% vs. 10.8% expected, 10.9% previous

Major Events/Reports:

North Korean Missile Mayhem

It’s time for the latest update on the Democratic People’s Republic of Korea’s (DPRK) path to harnessing the destructive power of the atom for (according to the DPRK) defense against the evil capitalist empire of the United States of America and its lackeys.

According to DPRK state news, the magnanimous, wise, and extremely handsome Supreme Leader Kim Jong Un personally “guided the test-fire on the spot” of the Hwasong-12 “Juche Weapon“, which is a “Korean-style medium long-range strategic ballistic rocket.”

The test fire actually happened on Sunday but state news reported today that “the newly-developed ballistic rocket [is] capable of carrying a large-size heavy nuclear warhead.”

DPRK state news also quoted the divine words of Supreme Leader Kim Jong Un as follows:

“If the U.S. awkwardly attempts to provoke the DPRK, it will not escape from the biggest disaster in the history.”

DPRK state news then added that “the U.S. should not to disregard or misjudge the reality that its mainland and Pacific operation region are in the DPRK’s sighting range for strike and that it has all powerful means for retaliatory strike.”

Saudi Arabia and Russia agree to extend oil cut deal

In a joint press statement earlier, Russian energy minister Alexander Novak and Saudi energy minister Khalid al-Falih announced that they agreed to extend OPEC’s oil cut deal by nine months to March 2018.

The duo also said that they’re confident that they can convince the other oil procucers to extend the oil cut deal.

New Zealand’s retail sales rise in Q1

According to New Zealand’s latest retail sales report, retail sales volume in New Zealand increase by 1.5% quarter-on-quarter between Q4 2016 and Q1 2017. This is the largest increase in three quarters and easily beats the consensus for a 1.1% increase.

In addition, the rise in retail sales volume was somewhat broad-based, with 9 out of 15 retail store types reporting higher sales volume. Moreover, all regions in New Zealand reported an increase in retail sales, which is great news and a healthy sign that consumer spending was strong.

Commodities resume last week’s rally

The commodities rally from last week isn’t showing any signs of stopping just yet, since commodities were in the green again during today’s Asian session. Also, oil was leading the way.

Precious metals were in demand.

  • Gold was up by 0.24% to $1,230.62 per troy ounce
  • Silver was up by 0.94% to $16.554 per troy ounce

Base metals were mixed but mostly in positive territory.

  • Copper was up by 0.24% to $2.534 per pound
  • Zinc was up by 0.79% to $2,571.00 per dry metric ton

Oil benchmarks outperformed.

  • U.S. crude oil was up by 1.65% to $48.63 per barrel
  • Brent crude oil was up by 1.55% to $51.63 per barrel

The U.S. dollar index has yet to recover from Friday’s drop. In fact, the U.S. dollar index was 0.07% lower to 98.98 for the day when the Asian session ended. And that likely helped stoke demand for commodities.

However, it’s also possible that the general sentiment for commodities improved further when positive new for oil began to make the rounds.

Signs of returning risk appetite in Asia-Pacific

The major equity indices in the Asia-Pacific region had a mixed performance. Many were in the green, though. And those that were in the red were already off their lows.

  • Australia’s ASX 200 was down by 0.26% to 5,822.00
  • New Zealand’s NZX 50 was down by 0.30% to 7,429.94
  • The Shanghai Composite was up by 0.28% to 3,092.30
  • Hang Seng was up by 0.65% to 25,320.00
  • The Nikkei Index was down by 0.15% to 19,853.50
  • KOSPI was down by 0.13% to 2,288.91

Market analysts blamed the early risk aversion on last week’s global cyber attack and North Korea’s missile test.

As for the returning appetite for risk, market analysts attributed that to the jump in oil prices after word got around that Russia and Saudi Arabia agreed to extend the oil cut deal.

Major Market Mover(s):

Comdolls

The comdolls (NZD, AUD, CAD) outperformed during today’s Asian session, thanks to another round of rising commodity prices.

It was initially only a two-way race between the Kiwi and the Aussie, with the Kiwi leading the way, likely because of New Zealand’s positive retail sales report.

However, the Loonie would later join the race and even almost stole victory from the Kiwi, thanks to the surge in oil prices after Russia and Saudi Arabia announced that they agreed to extending OPEC’s oil cut deal and that the other oil producers will likely play along.

NZD/USD was up by 23 pips (+0.34%) to 0.6877, NZD/JPY was up by 33 pips (+0.43%) to 77.97, NZD/CHF was up by 34 pips (+0.50%) to 0.6885

AUD/USD was up by 10 pips (+0.13%) to 0.7400, AUD/JPY was up by 21 pips (+0.25%) to 83.89, AUD/CHF was up by 17 pips (+0.23%) to 0.7407

USD/CAD was down by 31 pips (-0.23%) to 1.3674, EUR/CAD was down by 37 pips (-0.25%) to 1.4944, AUD/CAD was down by 4 pips (-0.04%) to 1.0118

JPY

The yen showed weakness from the get-go, even though risk aversion initially prevailed. And that was likely due to jitters over North Korea’s missile test over the weekend.

And when risk appetite began to return, the yen’s weakness only got worse. And so the yen ended up as the worst-performing currency of the Asian session.

USD/JPY was up by 14 pips (+0.13%) to 113.37, CAD/JPY was up by 32 pips (+0.40%) to 82.90, GBP/JPY was up by 33 pips (+0.22%) to 146.29

Watch Out For:

  • 7:15 am GMT: Swiss PPI (0.0% expected, 0.1% previous)