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High-yielding currencies gave way to the dollar and the yen, as concerns over North Korea and the Fed’s rate hike schedule reigned supreme.

  • Australia clocks in trade surplus of 2.47B AUD in May vs. 1.00B expected, 0.09B AUD in April
  • Risk sentiment choked by lingering North Korea concerns, lack of details from the FOMC meeting minutes

Major Events/Reports:

Australia’s trade balance

Data from the Land Down Under showed that the economy’s trade surplus had widened from 0.09B AUD in April to 2.47B AUD in May.

Exports carried the weight of the improvement, as the industry bounced back from the effects of cyclone disruptions in Q1 2017. It jumped by a whopping 9% for the month, the fastest since November 2016.

The progress was pretty broad-based with rural goods (+3.0%), non-rural goods (+13.0%), non-monetary gold (+3.0%), and services (+1.0%) all gained while “non-rurals” like sugar and beverages (-11.0%) dipped.

Meanwhile, imports also inched 1.0% higher for the month, with intermediate and other merchandise goods (+5.0%) rising the most while services (+1.0%) also gained. Imports of non-monetary gold (-25.0%) fell, though.

Thing is, analysts had already called the improvements in Australia’s trade after being weighed down by cyclone disruptions. Market players are now expecting real net exports to be neutral in Q2 2017 before making significant GDP contributions in Q3.

Slight risk aversion

With not a lot of other data on the docket, Asian session players caught up to their U.S. counterparts.

That is, they continued to price in their concerns that (a) G20 leaders would talk about North Korea and would escalate tensions against hermit kingdom and (b) that Fed members don’t seem as excited to raise rates and normalize their balance sheets as they implied in their statement.

The lack of optimism from the Fed and a bit of risk aversion over North Korea-induced tensions kept market bulls in the sidelines.

  • Nikkei is down by 0.55%
  • Australia’s A SX 200 is down by 0.03%
  • Hang Seng is down by 0.25%, and
  • Shanghai index is down by 0.31%

Major Market Mover(s):

USD

Traders showed the scrilla some love after the Fed’s not-so-hawkish meeting minutes weighed on overall risk appetite.

EUR/USD hit a session high of 1.1355 before settling down to 1.1339, while GBP/USD slid by 9 pips (-0.07%) to 1.2934 and USD/CHF inched a pip higher at .9649 after dropping to .9636.

JPY

Tensions in North Korea continued to spook market players and boost the “safe haven” yen.

EUR/JPY is down by 38 pips (-0.30%) to 128.05, GBP/JPY is down by 27 pips (+0.18%) to 146.11, AUD/JPY is down by 23 pips (-0.27%) to 85.82, and NZD/JPY is down by 34 pips (-0.41%) to 82.16.

Watch Out For:

  • 6:00 am GMT: German factory orders (1.9% expected, 2.2% previous)
  • 7:15 am GMT: Switzerland’s CPI (0.0% expected, 0.2% previous)
  • 8:10 am GMT: Euro Zone’s retail PM
  • 8:30 am GMT: U.K. housing equity withdrawal (q/q) (-7.4B GBP expected, -10.2B GBP previous)