An eventful Asian session for forex traders, as AUD jumps on a GDP-related data, GBP fills weekend gaps, and trouble brews between some of the world’s largest oil producers.
- GBP starts trading week with weekend gaps
- Saudi Arabia, UAE, Egypt, and Bahrain cut diplomatic ties to Qatar over “terrorism and extremism”
- AU AIG services index down from 53.0 to 51.5 in May
- AU MI inflation gauge clocks in at 0.0% vs. 0.5% growth previous
- AU company operating profits (q/q) up by 6.0% vs. 5.1% expected, 20.1% previous
- AU ANZ job ads up by 0.4% vs. 1.5% previous
- China’s Caixin services PMI up from 51.5 to 52.8 vs. 51.4 expected
AUD higher on inventories data
Australia printed a number of reports earlier today including the AIG services index (better-than-expected), MI inflation gauge (no growth), job ads (slightly lower growth), and company operating profits (better-than-expected).
But what caught the investors’ attention was the inventories report. Australia’s Bureau of Statistics (ABS) showed non-farm inventories jumping by 1.2% in the first three months of the year when analysts had expected a 0.5% uptick.
More importantly, this directly factors in Australia’s real GDP. In fact, inventories is now expected to add 0.4% to Australia’s Q1 2017 GDP, lessening the possibility of a back-to-back negative quarterly growth (read: technical recession) in Australia.
GBP starts week on a weak note
Not surprisingly, terror attacks in London over the weekend translated to downside gaps for the pound at the start of the week.
ICYMI, a van had mowed down pedestrians on the London Bridge last Saturday, followed by stabbings in bars around the Borough Market. At least seven people were killed and 48 others injured while the police have killed three attackers.
The attack marks the third in three months, and comes just days before the U.K. is set to hold its general elections. The pound opened the week lower, but recovered its start-of-week losses against most of its counterparts.
Saudi Arabia, UAE, Egypt, and Bahrain cut diplomatic ties to Qatar
Saudi and three other nations cut their diplomatic ties to Qatar early Monday, citing Doha’s ties to terrorism and the need to maintain national security.
Saudi Arabia, the UAE, Bahrain, Oman and Qatar form a regional alliance known as the Gulf Cooperation Council (GCC), which is one of the most influential in the Middle East.But the UAE’s state news agency WAM reported that the Emirates are now giving diplomats 48 hours to leave the country, citing their “support, funding and embrace of terrorist, extremist and sectarian organisations.”
Ditto for Bahrain, which said that it would withdraw its diplomatic mission from Doha within 48 hours and that all Qatari diplomats should leave Bahrain within the same period.
Meanwhile, Egypt announced the closure of its airspace and seaports for all Qatari transportation to “protect its national security.”
Saudi also closed its borders and halted air and sea traffic with Qatar, urging “all brotherly countries and companies to do the same.”
The move escalates disagreements over Qatar’s support of the Muslim Brotherhood, the world’s oldest Islamist movement, as well as claims that Doha is backing the agenda of regional arch-rival Iran.
Qatar has yet to comment on the announcements, but has categorically denied supporting terrorism or Iran in its past statements.
For now, the escalating tensions between some of the world’s largest oil producers was enough to boost Black Crack prices higher.
Brent crude oil shot up by 1.42% to $50.66 per barrel, while U.S. WTI also rose by 1.45% to $48.35.
Major Market Mover(s):
The Aussie was boosted by a better-than-expected inventories data from Australia as well as an upside surprise in Caixin’s services PMI release.
AUD/USD is up by 26 pips (+0.35%) to .7450, AUD/JPY is up by 39 pips (+0.48%) to 82.37, and AUD/NZD jumped by 44 pips (+0.42%) to 1.0456.
The pound started the week with downside gaps against its major counterparts, but soon filled them despite the lack of catalysts for the pound.
GBP/USD was 8 pips shy of closing the gap but is trading comfortably above 1.2850. Meanwhile, GBP/JPY shot up by 28 pips (+0.20%) to 142.27 and EUR/GBP inched 4 pips lower (-0.05%) to .8760.
Watch Out For:
- Swiss, German, and French markets out on Whit Monday holiday
- 7:15 am GMT: Spanish services PMI (57.5 expected, 57.8 previous)
- 7:45 am GMT: Italian services PMI (55.4 expected, 56.2 previous)
- 7:50 am GMT: French final services PMI expected to remain at 58.0
- 7:55 am GMT: German final services PMI expected to remain at 55.2
- 8:00 am GMT: Euro Zone final services PMI expected to remain at 56.2
- 8:30 am GMT: U.K. services PMI (55.1 expected, 55.8 previous)