Euro Under Pressure of Weak Production Reports, USD Higher
The euro fell after a solid growth versus US dollar. The single currency reached its highest level since May 26 on Thursday. Pressure on the single currency was provided by weak data on industrial production in France and Germany. German industrial production fell by 1.0% in April, below the forecast for a rise of 0.3%. German exports fell by 0.3% in April while imports rose 2.2%. French Industrial production also declined, with a reading of -0.5%. This missed the estimate of 0.4% growth.
The US dollar was higher while the euro retreated from earlier gains, as traders looked ahead to the G7 summit. Still, the American currency and Japanese yen stay the weakest currencies in a week. German 10 year bund yield fell by 0.036, trading below 0.45 handle. Italian 10 year yield rises 0.068 to 3.061.
Canadian dollar remains steady, despite weaker than expected job data. Canada employment dropped -7.5k in May, below expectation of 19.1k growth. Unemployment rate was unchanged at 5.8%. Also from Canada, housing starts dropped to 196k in May, below expectation of 217k.
China’s trade surplus narrowed to USD 24.9B in May, below expectation of USD 32.5B. Exports rose 12.6% yoy to USD 212.8B while imports rose 26.0% yoy to USD 187.9B. In CNY terms, Exports rose 3.2% to CNY 1341B while imports rose 15.6% to CNY 1185B. Trade surplus narrowed to CNY 157B, below expectation of CNY 192B.
Markets expect the G6+1 summit in Canada, today and tomorrow. Ahead of the meeting, US President pledged, with his tweets to, straightening out unfair trade deals with G7 countries. Facing pressure from Germany, France and Canada, Trump will continue with his confrontational approach. It is also reported, that Trump will leave earlier than anticipated, right after Saturday’s morning session, on June 9. The American leader will fly to Singapore for the highly anticipated summit with North Korean leader on June 12.
Japan was the only close ally of the US that was not even given a temporary exemption on the steel and aluminum tariffs. The meeting between Japan’s PM Shinzo Abe and US President Donald Trump ahead of G6+1 submit produced no progress on trade. Abe and his cabinet members have repeatedly said that they do not want bilateral free trade agreements (FTA), while Donald Trump is insisting on the FTA.