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Asian session players stayed away from higher-yielding assets ahead of the weekend G7 meetings and next week’s Fed and ECB events.

  • Japan’s bank lending (y/y) up by 2.0% vs. 2.2% expected, 2.1% previous
  • Japan’s current account surplus widens from 1.77T JPY to 1.89T JPY in April
  • No changes to Japan’s -0.2% GDP in Q1 2018
  • Japan’s Economy Watchers Sentiment dips from 49.0 to 47.1 in May
  • BOJ to consider cutting inflation forecasts?
  • China’s trade surplus tightens from 183B CNY to 157B CNY vs. 238B CNY expected

Major Events/Reports:

China’s trade data

Data from the world’s second largest economy showed its trade surplus narrowing in May.

China’s trade surplus narrowed down from $40.51B to $24.92B when analysts saw the number at $31.9B.

Details presented a better picture. Turns out, aluminum and aluminum products helped push exports 12.6% higher during the month, which is stronger than the 10.0% growth that analysts had estimated.

Meanwhile, imports had risen by 26% from a year earlier in May on top of the 21.5% increase in April. For reference, analysts had only expected an 18.7% uptick.

Trade surplus in yuan-denominated terms also reflected the same tightening, dipping from 183B CNY to 157B CNY. Still, exports inched 3.2% higher after the previous month’s 3.5% dip, while imports popped up by 15.6% against April’s 11.6% increase.

Traders stayed away from risk

Asian session market players mostly stayed away from higher-yielding bets ahead of the G7 meetings in the next two days.

And why not? Trump’s recent tweets support speculations that the Donald has no problem further isolating the U.S. from the other 6 members and that he’ll stick with his hard lines on Iran and Paris agreements as well as his protectionist stances on global trade.

Meanwhile, others are looking for more signals ahead of next week’s Fed and ECB meetings. For newbies out there, you should know that the Fed is widely expected to raise its interest rates while the ECB could finally hint at some stimulus tapering down the road.

  • Nikkei is down by 0.34% to 22,745.2
  • A SX 200 is up by 0.14% to 6,059.6
  • Hang Seng is down by 1.18% to 31,141.3
  • Shanghai index is down by 1.35% to 3,067.67

Commodities also failed to gain support, with gold failing to take advantage of a bit of dollar weakness and oil taking hits from weaker demand from China.

  • Gold is down by 0.06% to $1,296.30
  • Brent crude oil is down by 0.45% to $77.07
  • U.S. WTI is down by 0.06% to $65.84

Major Market Mover(s):

AUD

The Aussie took some hits after China’s headline numbers missed expectations. Luckily for the bulls, the impact was muted by the not-so-terrible details of the report.

AUD/USD is down by 13 pips (-0.17%) to .7611
AUD/JPY is down by 15 pips (-0.18%) to 83.46
EUR/AUD is up by 40 pips (+0.26%) to 1.5513
GBP/AUD is up by 42 pips (+0.24%) to 1.7638

CAD

The Loonie also lost a pip or two on the back of falling oil prices.

USD/CAD is up by 12 pips (+0.09%) to 1.2982
EUR/CAD is up by 25 pips (+0.16%) to 1.5327
GBP/CAD is up by 18 pips (+0.10%) to 1.7427
CAD/JPY is down by 10 pips (-0.12%) to 84.47

Watch Out For:

  • Start of G7 meetings
  • 6:00 am GMT: Germany’s industrial production (0.4% expected, 1.0% previous)
  • 6:00 am GMT: Germany’s trade balance (20.3B EUR expected, 22.0B EUR previous)
  • 6:45 am GMT: France’s industrial production (0.4% expected, -0.4% previous)
  • 8:30 am GMT: U.K.’s consumer inflation expectations