A sense of caution prevailed across the financial markets in Asia this Friday, as all eyes remain on the G7 Summit for fresh influence on the risk sentiment and dollar trades. In light of this, most majors held onto tight trading ranges, except for the Antipodeans. The OZ currencies slipped following the release of unimpressive Chinese trade figures, with the Aussie having emerged as the main laggard amid negative stocks and oil prices. The safe-haven Yen was better bid against its American rival, as investors continued to remain on the edge.
Main topics in Asia
BoJ may consider cutting inflation forecasts – Nikkei Asia Review
As reported by the Japanese Nikkei Asia Review, the Bank of Japan (BoJ) could be considering cutting its inflation forecast further, after taking off the target date for achieving its 2% target back in April.
UK starting salaries rise at fastest pace in three years – Survey
Reuters reports key findings from a survey by the UK’s Recruitment and Employment Confederation (REC).
Trump: European Union and Canada – Take down your tariffs and barriers
The US President Trump is back on the wires, via Twitter, urging the European Union and Canada to withdraw the ‘massive tariffs’ charged by them.
China’s May trade balance (CNY): Surplus shrinks as imports jump
China’s trade balance for May, in Yuan terms, came in at CNY 156.51bn versus CNY 148.31bn expected and CNY 182.8bn last. Exports came at +3.2% y/y vs +1.7% expected and +3.7% last, while imports were +15.6% y/y vs +8.6% expected and +11.6% last.
China’s trade surplus (USD) unexpectedly narrows in May
The China customs published trade balance for May in USD terms, reporting an unexpected decrease in trade surplus while both exports and imports beat estimates.
Key Focus ahead
The main focus towards the end of this week is likely to be the two-day Group of Seven (G7) leaders’ meeting in Quebec, Canada, starting later today. The ongoing trade issue will be the key topic on the agenda of the leaders, especially after the French President Macron urged the G7 leaders to resist against the US protectionist policies.
Late-Thursday, the US President Trump attacked the European Union (EU) and Canada on trade amid a backlash. Meanwhile, White House confirmed that Trump will leave the Summit four hours earlier on Saturday than previously scheduled.
On the data-front, Europe sees the German industrial and trade figures slated for release at 0600 GMT, followed by the European Central Bank (ECB) Chief Economist Peter Praet’s speech and UK consumer inflation expectations data. In the NA session, the Canadian jobs report will grab the eyeballs amid a lack of first-tier macro news from the US docket. Also, on tap remains the US drilling sector activity report that will have some influence on the oil and CAD traders.
EUR/USD: Yield differential favors bulls, but caution ahead of G7 could cap gains
The EUR/USD pair traded in a sideways manner around 1.18 in Asia, having clocked a three-week high of 1.1840 yesterday. Fears are on the rise the G7 meeting could dissolve into bitter fighting over trade. Hence, the pair may find it hard to scale the weekly high of 1.1840.
GBP/USD Stalling out near 1.34 as Brexit talks continue to yield little progress
The GBP/USD is flat for Asia, sticking close to the 1.3400 handle as the Sterling struggles to develop momentum with markets awaiting fresh headlines on Brexit. This Friday’s focus will largely swing to the upcoming G7 summit meeting.
Canada: Friday’s jobs report for May to post a headline improvement – Scotiabank
In the view of analysts at Scotiabank, Canada’s May jobs report is likely to show stronger headline numbers while wage growth is also seen rising somewhat.
G7 leaders divided on Trump tariffs ahead of key group summit – Reuters
As reported by Reuters, G7 leaders are increasingly divided over trade and tariffs, with key leaders from several nations appearing to be unwilling to stand up to the US trade policies while others are warning of increasing blowback.
China CPI inflation likely to rebound in May – Nomura
Analysts at Nomura offer their insights on the Chinese inflation data for the month of May due to be reported this Saturday at 0130 GMT.
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