US dollar strengthens and global equities rise as trade tensions cool
Laurence Hayward | May 15, 2019
Stocks globally recovered helped by a slightly calmer stance on the trade front. Brexit is still in focus for the UK with a rumored fourth agreement in the works. This morning’s data is impacting the US dollar. April Retail Sales fell to -0.2% m/m from 1.7% in March and Industrial Production fell to -0.5% from 0.2%.
“It is not the answer that enlightens, but the question”Eugène Ionesco
May 15, 2019
EUR/USD 1.1190 GBP/USD 1.2841 USD/CAD 1.3479 AUD/USD 0.6922 USD/JPY 109.33 USD/CNH 6.9129 USD/ILS 3.5701 USD/MXN 19.2176 USD/CHF 1.0076 USD/INR 70.3375
The dollar continues to rise and stocks recovered yesterday as the initial heat surrounding trade with China subsided. Kansas City Fed Chair, Ester George, said this was not the right time for the Central Bank to cut interest rates and warned such a move could potentially cause an economic downturn. She concluded by saying there was “little reason to be concerned” because of the low inflation as the labor market continues to show strength.GBP
It is rumored that PM Theresa May will tell opposition leader Jeremy Corbyn she plans to submit the Brexit withdrawal agreement to parliament during the week of June the 3rd. May wants to have the agreement in place before the end of the summer. This will be the fourth attempt to put an agreement in place. The pound held above the 1.2900 support yesterday helped by the positive employment data but it broke down through 1.2900 this morning on dollar strength.EUR
The Italian Deputy Prime Minister said he is open to breaking the EU fiscal rules if it would help create more jobs. Italian bond yields jumped higher after the comments. On the data front, German Q1 preliminary GDP came in as forecast at +0.4% a rise from 0.0% in Q4. French CPI rose to 1.3% from 1.2% y/y.CAD
The Canadian dollar weakened and then recovered. WTI oil prices fell ¾ of a cent to US $61.00, CPI rose to 2.0% y/y from 1.9% in March.ASIA/PACIFIC
Far East stocks rose led by Chinese shares after the Shanghai Composite rose 1.8%. The yen and the Indian rupee both strengthened. Chinese Retail Sales came in below expectations and Industrial Production was also soft. Japanese Construction Orders jumped higher and Machine Tool Orders remain soft.
The Australian dollar strengthening against the US dollar continued.
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