Forex news from the Asian trading session - 9 May 2018
Headlines:
- China says that parties involved should stick to Iran nuclear accord
- Japan PM Abe says North Korea must take concrete action on denuclearisation
- Japan says to closely monitor impact from US withdrawal from Iran deal
- Mike Pompeo expected to return with 3 US detainees - report
- PBOC sets USD/CNY reference rate at 6.3733 vs 6.3674 yesterday
- Reuters Poll: BOE to keep rates unchange at May 12 meeting
- Japan labor cash earnings March YoY rises 2.1% vs 1.0% est.
- Japan official reserve assets for April $1256B vs $1268.3B last month
- RBNZ says format of monetary policy statement has been updated
- UK BRC retail sales like-for-like for April -4.2% vs -0.8%
- NZ card spending retail for April -2.2% vs. 0.0% expected
- China Daily: PBOC may raise interest rates following the Fed
- Mnuchin: Effectively sanctions going into place immediately
Markets:
- USD leads, JPY lags on the day
- Asian equities mixed on the session (Nikkei down 0.34%)
- Gold down by 0.26% to $1,311.09
- WTI up by 2.32% to $70.66
- US 10-year yields up by 1 bps to 2.987%
- Bitcoin down by 1.51% to $9,023
In the aftermath of Trump's decision on Iran, oil is back up higher following a wild ride overnight. Brent extended gains to its highest levels this year, touching a high of $76.74. Meanwhile, the dollar also posted gains across the board as yields come back into focus once again.
Trump's withdrawal from Iran is all but expected, but as mentioned before he could have a range of many different outcomes and he chose the expected one - which is to withdraw from the deal, but still leave the door open for possible renegotiation with the parties involved.
As long as Iran doesn't move to escalate tensions further during the grace period before the sanctions officially kick in, there is still hope - though a very slim one. But the fact is, it's not a brutal knockout blow delivered and that in some ways is a relief.
Equities are finding it hard to cheer on the decision for the time being as investors remain cautious. The Nikkei is down but Chinese stocks are up, so there's a bit in it for everyone really. As for the Nikkei, also keep an eye out on Toyota's earnings which are set to be released at 0425 GMT.
The dollar held steady and extended gains across the board once again. EUR/USD continues to sit below 1.1900, AUD/USD below 0.7500, and NZD/USD below 0.7000 after yesterday's trading. On the day, the biggest loser is the Japanese yen though, with the currency falling against the rest of the major bloc, aided by further focus on US yields moving back towards 3% once again.
Yields are boosted by the fact that the US Treasury continues to flood the market with supply and yesterday's auction saw demand for 3-year notes being the weakest since November, with yields coming in at a 11-year high.
