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Risk-taking was the name of the game during the Asian session, as traders reacted to a better-than-expected outcome from last weekend’s negotiations between the U.S. and China’s trade representatives.

  • NZ’s retail sales (q/q) up by 0.1% vs. 1.0% growth expected, 1.4% uptick in Q4 2017
  • NZ core retail sales (q/q) improves by 0.6% vs. 1.1% gain expected, 1.8% increase in Q4 2017
  • NZ’s visitor arrivals dip by 1.3% vs. 1.5% decline in March
  • NZ’s credit card spending (y/y) up by 7.0% vs. 7.4% increase in March
  • U.K.’s Rightmove house price index shoots up by another 0.8% after gaining 0.4% in April
  • Japan’s trade surplus widens from 0.17T JPY to 0.55T JPY in April

Major Events/Reports:

Japan’s trade surplus widens

Data printed earlier today saw Japan’s trade surplus widening by 30% in April, as exports shot up more than imports did.

Japan’s trade surplus improved from 0.17T JPY to 0.55T JPY, as exports jumped by 7.8% from a year earlier in April. That’s the strongest increase since January! Meanwhile, imports also rose by 5.9% after clocking in a 0.6% decline in March.

Unfortunately for yen bulls, traders seem more interested in trading overall risk sentiment rather than Japan’s data releases.

New Zealand’s data dump

Kiwi traders got busy early in the session after New Zealand’s quarterly retail sales missed its expectations.

Retail spending only edged up by 0.1% in Q1 2018 when analysts had been expecting a 1.0% jump after the previous quarter.

Even core retail sales disappointed, showing only a 0.6% growth against expectations of a 1.1% gain and last quarter’s 1.8% expansion.

A closer look tells us that the numbers were even boosted a bit by higher fuel prices. Market geeks aren’t feeling too confident either, saying that they generally expect the weakening growth trend as consumers adjust to the government’s new housing policies. And as you know, this doesn’t bode well for consumer spending in general and its contribution to the Q2 2018 growth. Duhn duhn duhn.

U.S.-China trade war “on hold”

The biggest story of the hour is Steven Mnuchin sharing that the U.S. and China have both agreed to hold off their tariff threats and put the trade war “on hold.” Specifically, the U.S. Treasury Secretary shared that:

“We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework..”

China’s chief negotiator, Vice Premier Liu He, low key confirmed the truce, saying that last weekend’s talks have proved to be “positive, pragmatic, constructive and productive.

Though neither the joint statements nor the interviews revealed specific figures, Liu He shared that cooperation will be enhanced in such areas as energy, agriculture, health care, high-tech products and finance, with China pledging to “meaningful increases in U.S. agriculture and energy exports.

Naturally, the avoidance of head-on collision between the two major economic giants was a relief for risk-takers across the board.

  • Nikkei is up by 0.39% to 23,020.63
  • Australia’s A SX 200 is up by 0.05% to 6,084.50
  • Shanghai index is up by 0.77% to 3,217.93
  • Hang Seng is up by 1.26% to 31,439.88

Commodities also got a boost from overall risk-taking, though gold prices took hits as demand for the Greenback improved.

  • Gold is down by 0.31% to $1,287.30
  • Brent crude oil is up by 0.71% to $79.01
  • U.S. WTI is up by 0.74% to $71.90

Major Market Mover(s):

Though Australia didn’t print any economic reports, it got the biggest boost from news that China is avoiding a trade war with the U.S….for now.

AUD/USD is up by 12 pips (+0.18%) to .7519
AUD/JPY is up by 48 pips (+0.58%) to 83.62
GBP/AUD is down by 67 pips (-0.38%) to 1.7860
AUD/CHF is up by 27 pips (+0.35%) to .7513

The low-yielding yen was at the bottom of the forex pile thanks to traders preferring its higher-yielding counterparts.

USD/JPY is up by 48 pips (+0.43%) to 111.21
EUR/JPY is up by 38 pips (+0.24%) to 130.70
GBP/JPY is up by 23 pips (+0.15%) to 149.34

Watch Out For:

  • Swiss, German, and French markets out on Whit Monday holiday
  • 8:00 am GMT: ECB’s financial stability review