The Asia-Pacific region is starting the new trading week on an upbeat note after last week’s intense bout of risk aversion. And this risk-friendly environment apparently gave the higher-yielding Kiwi a boost. The safe-haven yen, meanwhile, groaned in pain.
The Greenback is also worth noting since it ended up as the second best-performing currency of the session. The pound is also noteworthy because it gapped lower when the new trading opened, thanks to Brexit-related news over the weekend.
- Rightmove U.K. HPI m/m: 1.2% vs. 1.1% previous
- Japan’s trade balance: ??¥97.6B vs. ??¥259.6B expected, ??¥172.2B previous
Brexit updates over the weekend
In an interview with the Sunday Times, Brexit Secretary David Davis made the following statements (which sound like threats).
“We don’t need to just look like we can walk away, we need to be able to walk away.”
“Under the circumstances, if that were necessary, we would be in a position to do it.”
These statements were made within the context of the E.U.’s demands that that the U.K. pay up first before being allowed to leave.
And when Davis was asked if the U.K. is really prepared to walk out from talks, Davis simply said: “Wait and see.”
Davis also flat out rejected the E.U.’s other demand that E.U. citizens in the U.K. should get various rights, including the right to claim benefits, by asking the following:
“How on earth would you manage such an exercise?”
OPEC ready to extend oil cut deal?
Saudi Energy Minister Khalid al-Falih said the following on Sunday, according to a Reuters report:
“Everybody I talked to… expressed support and enthusiasm to join in this direction [extension of oil cut deal], but of course it doesn’t preempt any creative suggestions that may come about”
“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers, if they wish to join, will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018.”
Oil benchmarks got some love in a mixed day for commodities, likely because of this announcement. After all, OPEC’s May 25 meet is looming ever closer.
- U.S. WTI crude oil was up by 0.79% to $51.07 per barrel
- Brent crude oil was up by 0.69% to $53.98 per barrel
Iron ore climbs
Iron ore is starting the new trading week on strong footing, with Dalian iron ore up by 4.4% to 495 yuan per dry metric ton during the session.
Market analysts attributed the rise in iron ore prices to higher steel prices. And the rise in steel prices, in turn, was attributed to expectations that supply will dwindle because of China’s ongoing crackdown on steel mills that fail to pass emission standards.
Risk-taking in Asia-Pacific
Equity indices from the Asia-Pacific region were mostly in the green today.
- Australia’s ASX 200 was up by 0.77% to 5,771.30
- New Zealand’s NZX 50 was up by 0.25% to 7,409.50
- The Shanghai Composite was down by 0.34% to 3,080.25
- Hang Seng was up by 0.83% to 25,386.50
- The Nikkei Index was up by 0.36% to 19,660.50
- KOSPI was up by 0.47% to 2,299.27
Market analysts couldn’t pinpoint the reason for the broad-based equities rise, although profit-taking by shorts and/or bargain-buying after last week’s selloff may be a possibility.
Major Market Mover(s):
There were no direct catalysts for the Kiwi during the Asian session. Even so, the Kiwi ended up being the top-performer, very likely because of the risk-on vibes during the session.
NZD/USD was up by 18 pips (+0.26%) to 0.6936, NZD/JPY was up by 42 pips (+0.55%) to 77.33, NZD/CAD was up by 32 pips (+0.35%) to 0.9382
The risk-friendly environment may have been great for the higher-yielding Kiwi, but it likely sapped safe-haven demand for yen. And as a result, the yen ended up as the worst-performing currency of the session.
CAD/JPY was up by 16 pips (+0.20%) to 82.41, EUR/JPY was up by 30 pips (+0.25%) to 124.80, CHF/JPY was up by 20 pips (+0.18%) to 114.39
The Greenback was the second best-performing currency of the Asian session. Market analysts can’t find a fundamentals-based reason, but it’s possible that the Greenback rose due to profit-taking by last week’s shorts.
USD/JPY was up by 33 pips (+0.30%) to 111.49, USD/CHF was up by 15 pips (+0.16%) to 0.9746, USD/CAD was up by 16 pips (+0.12%) to 1.3527
The pound gapped lower when the new trading week rolled around, thanks to Brexit Davis’ statements over the weekend. During the trading session itself, however, the pound was mixed but was mostly higher, likely because traders were trying to close the gaps.
GBP/USD gapped lower by 18 pips to 1.3015 but closed 17 pips lower (-0.13%) to 1.3001, GBP/JPY gapped lower by 31 pips to 144.67 but closed 26 pips higher (+0.18%) to 144.97, GBP/NZD gapped lower by 10 pips to 1.8793 but closed 52 pips lower (-0.28%) to 1.8741
Watch Out For:
- No major economic report coming up