US Dollar Stays Near 4-Month High

Market Reviews

The US dollar remains robust against the euro and the Swiss franc and trades near 4-month high versus major currencies. The American currency received a new impetus, as the euro fell to $1.19 yesterday, as a result of weaker than expected German data on industrial orders and a report on investor sentiment in the Eurozone. The Japanese yen is now trading much higher, while the Australian dollar is trading lower after disappointing data on retail sales. As for commodities, WTI crude oil jumped to 70.84 yesterday but is now back below 70.

The focus is on the nuclear deal with Iran. US President Donald Trump said that he will announce his decision on the future of the international nuclear agreement with Iran on Tuesday. Trump repeatedly threatened to withdraw from the deal.

Peter Praet (the European Central Bank’s chief economist) reaffirmed confidence in the euro area’s upswing despite gloomy economic data. Praet’s comments largely reflect the ECB’s stance that the slowdown is probably just a adjustment to a more sustainable pace of expansion, along with temporary factors including the timing of Easter holidays and the winter flu epidemic. Still, policymakers at last month’s meeting opted not to discuss how and when to wind down their stimulus program, deciding instead that they need more time to assess the outlook.

According to the Australian Bureau of Statistics (ABS), retail sales in Australia in seasonally adjusted terms did not change (0.0%) after rising by 0.6% in February. Economists had expected growth of 0.3%. Despite the mild March report, annual sales growth actually accelerated, rising to 3.2% in March from 3% in February, which is the fastest growth since July last year.

China’s exports increased by 12.9% yoy to USD 200.4B in April, while imports grew by 21.5% yoy to USD 171.6B. Exports to the US rose by 13.9% yoy to USD 135.9B while imports grew by 11.6% yoy to USD 55.6B, resulting in USD 80.3B in surplus. China’s trade surplus to the US grew by 15.6% yoy. The Chinese exports to the EU grew by 12.9% yoy to USD 121.9B while imports rose 20.1% yoy to USD 86.3B, resulting in USD 35.6B in surplus.