Weekly Market Review - May 27-31
Japanese Yen and the US dollar performed well on the week, gaining 1.00% and 0.51% against the euro, respectively. Canadian dollar and the Swiss franc have shown even better results, increasing by 0.89% and 0.41% against the US dollar, respectively.
In the cryptocurrency market, Bitcoin demonstrated another rally last weekend, which eventually pushed it to the $9,000 market for the first time in 12 months.
Gold has added over 1% as the trade tensions between the US and China continue. The trade war has a reverse effect on oil prices, with Brent and WTI brands tumbling over 5.5% on the week.
Japan’s Industrial Output Exceeds Expectations
Japanese government data released on Friday showed that the country’s industrial output increased in April by 0.6% in monthly terms. The performance was above analysts’ expectations of a 0.2% growth and following a 0.6% decline in March. Japan’s Ministry of Economy, Trade and Industry anticipates output to rise 5.6% this month and drop 4.2% in June. In a separate report, the government said that retail sales increased last month by 0.5% year on year, against an expected increase of 0.8%.
UK Consumers Are Optimistic Despite Brexit
According to a monthly survey conducted by market research firm GfK, UK consumers have been the most optimistic since September 2018, pointing to an improvement in their personal finances and less pessimistic outlook for the coming year. The GfK consumer sentiment index was up to -10 in May from April's increase to -13, beating all expectations. The research firm said that it anticipated further gains to be limited, admitting uncertainties on how the UK would leave the EU on October 31.
US Inflation Might Put Pressure on Fed
US inflation showed slower than initially anticipated growth in the first quarter of this year, which might force the Fed to consider a reduction in interest rates. The weak price growth came amid a significant drop in domestic demand. The Commerce Department stated that personal consumption expenditures (PCE) price index excluding the prices of foods and energy products expanded at a 1.0% rate on the quarter, the slowest growth in four years. Previously, core PCE price index was reported to have risen at a 1.3% rate.
Brazil’s GDP Slows For The First Time Since 2016
Brazils’ economy decelerated in the first quarter of this year for the first time since 2016, official data showed on Thursday. Statics agency IBGE said that the country’s GDP had contracted 0.2% compared to the fourth quarter of 2018, in line with analysts’ forecasts. The economy expanded 0.5% compared to the first quarter of last year, also in line with expectations. The poor economic performance puts pressure on President Jair Bolsonaro, who promised to boost growth and remove traces of the 2015-16 recession.
German Consumer Mood Cools
German consumer sentiment has deteriorated this month to touch its lowest level in over two years. The gloomier mood is caused by a decline in household spending and pessimism over economic growth outlook. The Gfk consumer sentiment, which relies on a survey that involves 2,000 German citizens, decreased to 10.1 points from 10.2 in April, which was revised downward. Analysts expected the figure to stop at 10.4 points.
China Might Use Rare Earths in Trade War
This week, rumours spread that China might use its dominance over rare earths to hit back at the US amid trade tensions between the two countries. According to Chinese media, Xi Jinping’s visit to a rare earth plant last week suggests that the country was ready to leverage its dominant position to gain privileges in the trade war. Rare earths represent 17 chemical elements that are used in materials for high-tech devices and military equipment, among others. The speculations drove the stock prices of rare earth producers.
Upcoming News to Watch
The markets in several countries will be closed throughout the week. Thus, on Monday, New Zealand will celebrate Queen's Birthday. On Wednesday, Singapore and Indian market activity will be off due to Hari Raya Puasa and Eid-Ul-Fitr holidays, respectively. Next day, South Korean markets will be closed on Memorial Day, while China and Hong Kong will be off on Friday on Tuen Ng Day holiday.
On Tuesday, the Reserve Bank of Australia will present its interest rate decision before the country will release GDP data later in the day.
The European Central Bank will come with its interest rate decision and monetary policy statement on Thursday.
The week will end with the US Nonfarm Payrolls indicator, which will likely shake the price of the US dollar.
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.