Rates & FX Market Update
US-China Trade Dispute on Hold, For Now
Highlights
¨ Global Markets: Risk assets were supported amid de-escalation of trade tensions between the US and China; the US Dollar gave up most of its gains to end flat on Monday (+0.04% d-o-d) while the EURUSD rose by +0.20%. The political situation in Italy is getting somewhat clearer as the disparate coalition proposed a new PM, Giuseppe Conte a lawyer with very limited political experience, yet to be accepted by Italy’s President. That said, Italian debt continued to get hammered as 10y BTP yield climbed another 15.7bps to 2.38%. While perhaps too premature to draw conclusions, markets might suggest this has turned into a rather Italian-centric issue with the new novice political leader, if appointed, likely to face strong opposition in Brussels while having to handle the disparate collation at home; we prefer to remain neutral EUR at this juncture.
¨ AxJ Markets: Elsewhere, the THB was little changed overnight amid continued selling pressure on EM assets. Thailand’s 1Q18 GDP climbed 4.8% y-o-y (consensus: 4.0%), lifted by strong exports, tourism, investments and farm output. The extremely strong print helped buoy the THB, although the USDTHB pair continues to test the 32.27 resistance. Despite the data, BoT is likely to remain non-committal towards any tightening, as strongly signalled in its last MPC meeting; stay neutral THB.
¨ Despite the flattish USD, the GBPUSD drifted lower yesterday; -0.31% d-o-d. Brexit and political issues resurfacing with the next round of negotiations with the EU starting this week and the patch of soft data seen during 1Q18 weigh on the Sterling Pound. Tomorrow’s economic data due include inflation and retail sales and will be closely scrutinised by both investors and the data dependent BoE. As such, positioning for upside surprise might offer good risk reward but a turn in the current sentiment would require a batch of solid soft and hard data; remain neutral GBP.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.