Greenback Boosted On Market Volatility

Market Reviews

Yesterday, stocks were boosted by Donald Trump’s decision to drop the hard-line position on restricting Chinese investments in US firms. But then Larry Kudlow (White House economic advisor) ruined the optimism by saying that the plan was neither harder nor softer.

NASDAQ declined -116.55 points (-1.54 %) to 7445.08. DOW fell -165.52 points (-0.69%) at 24117.59. S&P 500 dropped -23.43 points (-0.86%) at 2699.63. 10 year yield were down -0.053 at 2.827. WTI crude oil rose to surpass the key resistance of 72.83. The greenback turned up to be the firmest for this week. Yen and Loonie reinforced as well. Kiwi, Pound and Australian Dollar, on the other hand, are the softest.

The Association of Global Automakers published a statement to Donald Trump named: “International Automakers Are Not A National Security Threat” as an opposition to tariffs on import cars. The group stated: “these tariffs will harm today’s U.S. auto industry, which is comprised of fourteen auto manufacturers, all of which are global and 10 of which are international automakers.” And, “each of these companies employ American workers to produce cars in the United States, and tariffs will substantially increase prices for consumers.” It also said that “there is no national security justification for taxing imports of vehicles and parts or discriminating between global companies headquartered here or in allied countries.”

The group cautioned that “every U.S. production facility in the industry could be made available in a national emergency, and the 130,000 Americans who work directly for international automakers are no less patriotic or willing to serve their country in a time of crisis than any other American.”

The statement also contained: “if this investigation leads to tariffs, retaliation against U.S. exports is inevitable.” And, “substantial tariffs against major US auto exports have in fact already been announced, placing American auto workers on the front lines of this trade conflict.”

Eric Rosengren (Boston Fed President) claimed that the main task for Fed is not letting the economy to “run above capacity” and “fall far below the sustainable unemployment rate”. Boston Fed President commented the situation with inflation target, saying: “one might allow the inflation target to rise within the range during periods of low real rates, thus providing more room for the funds rate to fall during an economic downturn.”

The Reserve Bank of New Zealand has once again stood pat, holding the official cash rate at 1.75%. Central Bank’s statement noted the global economic outlook has been “tempered slightly by trade tensions in some major economies” and “ongoing volatility in some emerging market economies continues.” Members also stressed that: “recent weaker GDP outturn implies marginally more spare capacity in the economy than we anticipated.” And thirdly, “the Government’s projected spending impulse is also slightly lower and later than anticipated.”

Meanwhile, Japanese retail sales grew only 0.6% yoy in May. Today’s data marks German Gfk consumer sentiment and Consumer Price Index; Eurozone confidence figures; US Final Gross Domestic Product of the first quarter and unemployment claims.