Weekly Market Review - June 17-21
This week, the US dollar has been by far the worst performer, as the Fed suggested it might be ready to cut interest rates by the end of this year if the economy shows signs of weaknesses. The American currency lost 1.02% against the euro, 0.68% against the British pound, and 0.99% against Japanese yen. Mario Draghi, the president of the European Central Bank (ECB), said that the European economy might benefit from more stimulus.
In the commodities market, gold and silver have gained over 4.2% amid trade tensions between the US and China.
In the cryptocurrency space, Bitcoin is getting closer to the $10,000 mark. Earlier this week, Facebook announced that it would launch its own cryptocurrency called Libra, which will be used globally.
Here are the most important economic indicator updates of this week:
Singapore’s Economic Growth Probably Eased
The growth of Singapore’s main inflation index most likely eased last month for the first time since February as GDP growth slowed amid a drop in oil prices, according to a Friday poll by Reuters. Thus, Singapore’s consumer price index (CPI) in May might have increased by 0.6% compared to the same period in 2018, which points to a slower pace after a 0.8% growth in April. The ten economists surveyed by Reuters said that the core inflation had probably increased by 1.3% in May.
China’s Housing Market Run by Bulls
China’s new home prices increased at the fastest pace year-to-date in May, making it more difficult for the government to keep bubble-resembling housing market under tight control. On Tuesday, the National Bureau of Statistics (NBS) said that the average new home prices in the country’s 70 largest cities had increased by 0.7% last month compared to April when the growth was 0.6%. Year-on-year, home prices expanded by 10.7% in May, the same pace as in April.
Japan’s Exports Fall Again
Japanese exports declined for the sixth month in a row in May, as China-related exports of semiconductor manufacturing equipment and vehicle parts declined. On Wednesday, data from the Ministry of Finance (MOF) showed that exports fell 7.8% last month compared to the same period in 2018. Weak exports are adding to concerns about Japanese economic growth, which is negatively impacted by the tariff war between the US and China. Weak economic growth might force Prime Minister Shinzo Abe to postpone a planned sales tax increase to 10% for the third time.
UK Factory Orders Negatively Influenced by Brexit Uncertainties
The UK factory orders have declined this month amid uncertainties surrounding Brexit. On Wednesday, the Confederation of British Industry (CBI) said that industrial orders index tumbled to -15 over June from -10 in May, which is the worst performance since October 2016. Analysts surveyed by Reuters expected a decline to -12 in June. For the second quarter, manufacturing output might also show the worst result in three years.
New Zealand’s Economy Beat Central Bank Expectations
New Zealand’s GDP rose 0.6% in the first quarter that ended March, which is in line with analysts’ expectations. However, the result beat the reading anticipated by the country’s central bank, which predicted economic growth of 0.4%. The GDP expansion was driven by solid construction activity. Despite everything, policymakers still plan to cut interest rates again by the end of this year to support growth amid slowing housing market and trade tensions.
US Home Sales Driven by Lower Mortgage Rates
Home sales in the US rose last month more than expected, driven by lower mortgage rates. The performance points to the good state of the US economy, which is closely monitored by the more dovish Fed. On Friday, the National Association of Realtors reported that existing home sales jumped last month by 2.5% to a seasonally adjusted annual rate of 5.34 million units. April's reading was revised up to 5.21 million. Analysts on average expected existing home sales to increase to 5.25 million units.
Upcoming News to Watch
Next week, the markets will keep an eye on the tariff war between the US and China. Besides, the G20 summit, scheduled for June 27-29, will also be in the spotlight.
On Tuesday, the Fed Chair Jerome Powell will perform a speech, which might have an impact on the US dollar. Earlier in the day, the US will release several economic indicators, such as CB Consumer Confidence, new home sales, and house price index, among others.
The week will end with the UK economic growth report in annual and quarterly terms.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.