Risk-taking was a mixed bag of beans, as receding trade war concerns got mixed in with a bit of profit-taking ahead of this week’s major events.
- NZ GDP slips from 0.6% to 0.5% in Q1 2018 as expected
- Iran signals support for small increase in OPEC production
New Zealand’s GDP report
Data printed earlier today showed New Zealand’s economy rising by 0.5% in Q1 2018, which is lower than Q4 2017’s 0.6% uptick but is in line with analysts’ expectations.
On an annualized basis, growth had expanded by 2.7%, which is also weaker than the 2.9% increase in the previous quarter. Heck, it’s the weakest reading in almost four years!
A closer look tells us that mining, utilities, construction, and services weakened, while manufacturing and primary activity rebounded during the period.
Traders also focused on household spending – the biggest component of the economy – clocking in flat for the quarter thanks in part to temporary disruptions in the auto industry after stinkbugs were discovered in a carrier in February.
Though market geeks mostly expected the weakness, the misses in key components didn’t inspire traders to buy the Kiwi.
Improvement in risk sentiment
Risk-taking was a mixed bag of beans during the Asian session, as receding trade war concerns got mixed in with a bit of profit-taking ahead of BOE’s and OPEC meetings scheduled today and tomorrow.
A recovery in tech-related stocks during the U.S. session spilled over to the Asian bourses today.
- Nikkei is up by 0.63% 22,698.0
- A SX 200 is up by 0.83% 6,244.2
- Hang Seng is down by 0.63% to 29,508.8
- Shanghai index is down by 0.20% to 2,909.813
Commodities also reflected a bit of risk-taking, with crude oil prices shrugging off Iran accepting increases in OPEC’s oil production in favor of pricing in record high refinery runs in the U.S.
- Gold is down by 0.17% to $1,265.69
- Brent crude oil is up by 0.19% to $74.39
- U.S. WTI is up by 0.35% to $65.54
Major Market Mover(s):
With no other major catalysts on the docket, traders focused on a weaker NZ GDP release and sold the Kiwi across the board.
NZD/USD is down by 17 pips (-0.25%) to .6843
AUD/NZD is up by 28 pips (+0.26%) to 1.0761
EUR/NZD is up by 35 pips (+0.21%) to 1.6900
GBP/NZD is up by 49 pips (+0.25%) to 1.9235
The dollar continued to find support from receding trade war fears and higher U.S. Treasury yields.
USD/JPY is up by 22 pips (+0.20%) to 110.58
USD/CHF is up 16 pips (+0.16%) to .9978
USD/CAD is up by 7 pips (+0.05%) to 1.3312.
Watch Out For:
- 4:30 am GMT: SNB’s financial stability report
- 6:00 am GMT: Switzerland trade balance (1.89B CHF expected, 2.28B CHF previous)
- 7:30 am GMT: No changes expected from SNB’s policy statement
- 8:30 am GMT: SNB’s presser
- 8:30 am GMT U.K.’s public borrowing (5.1B GBP expected, 6.2B GBP previous)
- 11:00 am GMT: BOE’s monetary policy decision. Read our quick trading guide here!