Here are the latest developments in global markets:
FOREX: The Japanese yen was moving sideways near a 16-month low of 104.60 reached during the Asian session, last seen at 104.98 (-0.27%), as financial markets were rattled by worries over rising US-China trade tensions. Moreover, Turkey’s lira hit a record low of 4.03 to the dollar after the region failed to receive an exemption from the US import tariffs on Thursday. Dollar/lira surged 1.01% so far on Friday, paring some gains in the previous session. Pound/dollar changed hands at 1.4106 (+0.09%), reacting little to the confirmation of the 21-month Brexit transition offer by Donald Tusk, who chaired the EU summit in Brussels. Yesterday, the pair ended the day in the red despite an unexpected dissent vote on interest rates by BoE policymakers yesterday who decided to leave borrowing costs unchanged. Euro/dollar consolidated around 1.2334 during early European afternoon, remaining 0.24% up on the day. Dollar/loonie was also moving sideways around 1.2915 (-0.19%) after hitting a 1 ½-month low of 1.2828 earlier. Canada’s inflation and retail sales reports are scheduled for release later today, shifting some focus to the loonie. Kiwi/dollar and aussie/dollar were last up by 0.33% and 0.55% respectively after Trump decided to exempt Australia and New Zealand from hefty import tariffs. Still, the economies were worried about the impact of trade restrictions on the Chinese economy since China is a major buyer of their exports.
STOCKS: Although Trump paused his punitive import tariffs on the EU on Thursday, European stocks tumbled on Friday at 1030 GMT amid concerns of a potential global trade war, with basic metals and technology sectors losing the most. The pan-European STOXX 600 dived by 1.19%, recording a one-year low, while the blue-chip Euro STOXX 50 plummeted by 1.47%. The British FTSE 100 was down by 0.69%, while the German DAX 30 and the Spanish IBEX 35 were heading lower by 1.58% and 1.16% respectively. US stock futures were pointing to a negative open.
COMMODITIES: Oil prices rose on Friday after the Saudi Arabian energy minister said that OPEC would keep coordinating supply cuts with non-member countries including Russia in 2019. WTI crude and Brent managed to recoup part of yesterday’s gains, but they moved slightly lower from today’s intraday highs. The former climbed to $64.52 a barrel (+0.33%), while the latter edged up to $69.12 a barrel (+0.19%). Gold rallied to $1,342 per ounce (+1.14%), hovering near one-month highs on the back of a weaker dollar. Also, silver jumped by 1.02% to $16.53 per ounce.
Looking ahead in the day, investors will continue to look for any updates on the trade front as Trump’s signature on new import tariffs against China on Thursday and China’s response on Friday to levy its own tariffs on US products increased speculation that the trade story is not likely to end anytime soon despite exemptions being made on several allies including the EU, Australia, and South Korea. A 30-day consultation period will follow once the list of products being targeted are published, while a 60-day deadline has been given to the Treasury Department to form restrictions aimed to prevent Chinese companies to acquire US tech-sensitive firms. Meanwhile, the US Trade Representative, Robert Lighthizer, had warned on Thursday that any retaliation from China could bring new actions by the US. Therefore, it would be interesting to see what the US reaction to China’s threats would be. In case the US uses a tougher language, exasperating the trade turmoil, stock and FX markets could experience further downside pressures.
Developments in the White House would also be in focus after the replacement of the US National Security adviser, Herbert Mcmaster with the former ambassador to the UN in the Bush administration and a hawk on foreign policies, John Bolton, raised concerns over the US’s relations with Iran and North Korea. Note that McMaster had previously backed the choice of using military forces against North Korea.
In terms of data releases, the calendar will feature US and Canadian figures later in the day. At 1230 GMT, traders will keep a close eye on Canadian consumer prices and retail sales. The headline inflation is expected to have risen by 2.0% year-on-year in February compared to 1.7% seen in the previous month, bringing some good news to BoC policymakers who are hoping for the measure to reach the midpoint of their 1-3.0% target. Growth in retail sales is also anticipated to have improved in January, with the gauge said to have surged by 1.1% month-on-month after a fall of 0.8% in December. If the data appear better-than-expected, the loonie could extend gains as this could signal further rate hikes by the BoC.
Regarding the US data, US durable goods orders, published at the same time, are likely to have strengthened in February as well. Particularly, analysts believe that new orders for long-lasting manufacturing products have rebounded by 1.5% m/m after tumbling by 3.6% in January. A few hours later, new home sales due at 1400 GMT could show an increase of 0.623 million units from a rise of 0.593 million in the preceding month.
In energy markets, Baker Hughes will report on the number of active US oil rig count.
Turning to today’s public appearances, Atlanta Fed President Raphael Bostic (voter) will deliver remarks at 1210 GMT, while 20 minutes later at 1230 GMT, we will hear from BoE MPC member Gertjan Vlieghe. Then at 1430 GMT, Minneapolis Fed President Neel Kashkari (non-voter) will step up to the rostrum, followed by Dallas Fed President Robert Kaplan (non-voter) at 1530 GMT.