Weekly Market Review - June 3-7
This week, the euro has been the best performer among Forex majors, gaining 0.84% against the US dollar. The American currency is under pressure of potential rate cuts from the Fed, as the economy is affected by the trade war with China.
In the commodity market, gold and silver have gained over 2.1% for the week as they act as safe-haven assets.
Bitcoin departed from its recent year-to-date peak, currently trading close to the $8,000 level.
Here are the most important economic reports that have moved the markets since Monday:
Bank of Japan Might Cut Rates
The Bank of Japan will cut its already negative short-term interest rate from -0.1% to -0.3% in September to mitigate the risks caused by an anticipated rate cut by the US Federal Reserve, according to JPMorgan. The American central bank is now expected to cut its rate in September and December after the re-escalating trade war with China. As per Hiroshi Ugai, JPMorgan’s chief Japan economist, the Bank of Japan will be forced to react. Otherwise, the yen will note a rapid strengthening.
Industrial Output in France Beats Forecasts
French industrial output increased more than anticipated in April, driven by energy production. The INSEE said on Friday that industrial production expanded by 0.4% compared to March when the indicator showed a decline by 1.1%. Economists expected the output to show an increase of 0.3% in April. Energy and utilities output was up 3.2% while manufacturing production without energy was unchanged after a March decline by 1.1%.
Germany’s Economy Hit by Exports, Industrial Output
Europe’s largest economy shows signs of vulnerability after data on Friday showed that German exports and industrial output fell more than expected in April. The latter declined by 1.9% compared to March, which represents the biggest decline since August 2015, the Statistics Office stated. Analysts predicted a decrease in industrial output by only 0.4%. Elsewhere, German exports fell 3.7% for the month, also the worst performance since August 2015.
US Imports And Exports Tumble
The US trade deficit contracted in April amid tumbling imports and exports, with some economists being concerned that Trump’s “America First” stance was hampering trade between the US and the rest of the world. The Commerce Department said on Thursday that Goods imports declined 2.5% to $208.7 billion, the lowest level since the beginning of 2018. Goods exports dropped 3.1% to $136.9 billion, which is the largest drop since the beginning of 2015, amid a tumble in civilian aircraft exports.
UK House Prices Rebound
House prices in the UK increased at the fastest annual pace since 2017 in the three months through May. Mortgage lender Halifax announced on Friday that house prices rose 5.2% compared to the same period in 2018, up from 5.0% annual growth in the three months to April. The reading beat analysts’ average forecasts. In May, house prices added 0.5% on the month, against an expected decline. In April, the monthly gain was revised up by 0.1% to 1.2%.
US to Impose 5% Tariff on Mexican Goods
Recently, the US has reached trade agreements with Mexico and Canada, but investors are concerned about Trump’s intention to impose a 5% tariff on Mexican goods. The US and Mexico continue talks over the border issue, with Mexican Foreign Minister Marcelo Ebrard making sure that his country would dispose 6,000 National Guardsmen to stop the immigrants from Central America through the southern border. US VP Mike Pence said that the tariff would be imposed on Monday anyway, with the final decision expected from Trump.
Upcoming News to Watch
In the first hours of Monday, Japan is expected to report on its GDP performance in annual and quarterly terms. During the same day, the UK will also release its GDP data, along with industrial production, manufacturing production, and trade balance data.
On Wednesday, China and the US will release their inflation data for May. Analysts expect the US consumer price index to slightly decline in both monthly and annual terms while the Core CPI to stay unchanged.
The US will end the week with retail sales, industrial production, and manufacturing production data.
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. Learn more.