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The Aussie, Loonie, and Kiwi all stole the show during the Asian session as strong economic reports got mixed in with positive NAFTA prospects.

  • Japan’s average cash earnings (y/y) up by 0.8% in April vs. 1.4% growth expected, 2.0% uptick in March
  • NZ ANZ commodity prices rise by 1.5% vs. 1.0% growth in April
  • Australia posts 1.0% GDP growth in Q1 2018 vs. 0.9% expected, upwardly revised 0.5% gain in Q4

Major Events/Reports:

Australia’s GDP report

As expected, Australia’s economy grew stronger in Q1 2018. What analysts didn’t expect, however, was that it would gain by 1.0% instead of 0.9%.

That’s right! GDP in Q1 2018 clocked in at 1.0% after an upwardly revised 0.5% reading in Q4 2017. This translates to an annualized growth of 3.1%, which is also higher than the previous quarter’s 2.4% reading and the expected 2.8% uptick. Oh, and that’s the fastest annualized growth since Q2 2016!

Exports was the Lebron to team Australia, as it contributed 0.5% to the GDP. Government spending (+0.3%), household consumption (+0.2%), and inventories (+0.2%) also pushed the figure higher.

Final consumption expenditure only shot up by 0.6% after gaining by 1.4% in the previous quarter. Meanwhile, increases in state and local government spending pushed the component 1.6% higher after Q4 2017’s 2.2% uptick.

Some analysts pointed out that exports won’t play “catch-up” for long, and that it won’t be as strong in the next quarter. Others also remarked on not-so-fantastic wage and housing market contributions, which could keep the RBA on the sidelines for longer.

For now, though, it looks like forex bulls are happy to price in the strong figures that support the RBA’s bias that the next cash rate move is up rather than down.

Trump to exempt Canada from tariffs?

A report from ABC cited “two administration officials and two sources close to the White House” saying that Treasury Secretary Steven Mnuchin has urged the POTUS to exempt Canada from steep steel and aluminum tariffs.

If you recall, Trump’s decision to go ahead with the tariffs has sparked trade war fear across the board.

But if ABC is to be believed, it looks like there’s a healthy debate going on among Trump’s advisors. Will Trump side with Mnuchin on this one?

Upbeat risk sentiment

The combination of strong economic reports, optimistic NAFTA prospects, and a strong U.S. session for tech companies boosted the Asian bourses across the board.

  • Nikkei is up by 0.45% to 22,640.2
  • A SX 200 is up by 0.13% to 6,024.6
  • Hang Seng is up by 0.45% to 31,234.5
  • Shanghai index is down by 0.15% to 3,109.612

Commodity prices also got suckered in to the risk appetite party.

  • Gold is up by 0.04% to $1,296.81
  • Brent crude oil is up by 0.92% to $75.64
  • U.S. WTI is up by 0.41% to $65.78

Major Market Mover(s):

Comdolls

The Aussie got a good boost from a stronger-than-expected GDP release and might have taken the Kiwi along for the ride. Meanwhile, the Loonie also caught a pip or two on rumors that Mnuchin is gunning for Canada’s exemption in Trump’s steel and aluminum tariffs.

AUD/USD is up by 40 pips (+0.52%) to .7656
AUD/JPY is up by 55 pips (+0.66%) to 84.16
AUD/CHF is up by 45 pips (+0.60%) to .7542
EUR/AUD is down by 79 pips (-0.52%) to 1.5304
GBP/AUD is down by 71 pips (-0.40%) to 1.7504

NZD/USD is up by 17 pips (+0.24%) to .7040
NZD/JPY is up by 30 pips (+0.38%) to 77.40
NZD/CHF is up by 30 pips (+0.44%) to .6936

USD/CAD is down by 28 pips (-0.21%) to 1.2938
CAD/JPY is up by 33 pips (+0.39%) to 84.96
CAD/CHF is up by 25 pips (+0.33%) to .7614

Watch Out For:

  • 7:15 am GMT: Switzerland’s CPI (0.3% expected, 0.2% previous)
  • 8:10 am GMT: Euro Zone’s retail PMI
  • 10:40 am GMT: BOE MPC member Silvana Tenreyro to give a speech in Belfast