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Risk appetite carried over from yesterday thanks to a lack of market-moving catalysts during the Asian session.

  • New Zealand’s trade surplus narrows down to 103M NZD in May vs. 536M in April
  • Premier Li Keqiang: China capable of controlling systemic risks, achieving full-year growth targets
  • Risk-friendly tone carried over from the previous sessions

Major Events/Reports:

New Zealand’s trade data

New Zealand’s merchandise trade surplus narrowed to 103M NZD in May after seeing a downwardly revised 536M NZD surplus in April. This marked the third consecutive surplus after eight consecutive deficits. Analysts had expected a surplus of 420M NZD.

It wasn’t all gloom and doom, though. After all, the narrower surplus was due to strong exports outpacing the increase in imports.

Exports popped up by 8.7% from a year earlier in May and marked its highest monthly level since March 2014. Dairy exports led the rise with its 42% uptick while exports of meat and edible offal – the second largest commodity export – rose for a fifth consecutive month.

Meanwhile, imports picked up by 15% from a year earlier, led by 65% increase in shipments of crude oil. Statistics NZ noted, however, that they were imported in large, irregular shipments and could cause fluctuations in the data.

Overall, the details of New Zealand’s trade data still point to economic strength.

Premier Li Keqiang speech

In a speech at the Annual Meeting of the New Champions 2017 –also known as Summer Davos – in the Northeastern coast city of Dalian, Chinese Premier Li took the chance to talk up the second largest economy in the world.

The Premier assured his audience that China is doing its “utmost effort” to create employment, and that the economy will further expand market access to the service and manufacturing sectors by relaxing restrictions on foreign ownership.

More importantly, Li repeated that there will be no hard landing for China, as they are “fully prepared” for a domestic transformation that would enable the country to achieve its growth targets.

Risk appetite extended

With not a lot of other market-moving data on tap, Asian session investors took advantage of the previous sessions’ risk-friendly environment and pushed high-yielding investments higher.

Nikkei, boosted further by a weak yen, rose by 0.31% to 20,216.50 while Hang Seng ended mid-day session unchanged at 25,872.50. Meanwhile, Australia’s A SX 200 dipped by 0.07% to 5,716.30 while the Shanghai index fell by 0.25% to 11,408.56.

Major Market Mover(s):

AUD

An uptick in iron ore prices, an optimistic speech by Premier, and overall risk appetite pushed the high-yielding Aussie higher across the board.

AUD/USD is up by 14 pips (+0.19%) to .7599, AUD/JPY is up by 16 pips (+0.19%) to 85.01, and AUD/NZD is up by 9 pips (+0.09%) to 1.0415.

USD and JPY

The low-yielding dollar took a couple of steps back against its higher-yielding counterparts as risk appetite reigned supreme during the Asian session.

EUR/USD inched 12 pips (+0.11%) higher to 1.1191, USD/JPY briefly touched the 112.00 handle before settling down to 111.89, and GBP/USD 9 pips (+0.07%) to 1.2728.

Meanwhile, EUR/JPY jumped by 14 pips (+0.11%) to 125.21, GBP/JPY is up by 11 pips (+0.08%) to 142.40, and CAD/JPY is up by 7 pips (+0.09%) to 81.61.

Watch Out For:

  • 8:00 am GMT: Draghi to speak at the ECB central bank forum in Portugal
  • 8:30 am GMT: RBA’s Assistant Governor Guy Debelle to speak in Singapore
  • 9:30 am GMT: BOE’s financial stability report
  • 10:00 am GMT: BOE’s Mark Carney to hold a presser on the financial stability report
  • 10:00 am GMT: CBI realized sales (4 expected, 2 previous)