Tag: Forex News Round Up

Trump to Signal New China-US Trade Talks

U.S. President Donald Trump on Wednesday signaled a new direction in U.S.-China trade talks and said any deal would need “a different structure,” fueling uncertainty over current negotiations and sending U.S. stocks lower.



In an early morning post on Twitter, Trump said the current track appeared “too hard to get done” and cited difficulties such as verification, but he gave no other details about what he or his administration was looking for amid ongoing negotiations.

Representatives for the White House did not respond to a request for more information about the president’s statement. Representatives for China’s Foreign Ministry did not immediately respond to a request for comment on Trump’s statement.

“Our trade deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion,” Trump wrote in his post.

via Reuters

London House Prices Drop 0.2% in March

House prices in London tumbled in March, with the annualised rate of inflation dropping to minus 0.7%, the steepest fall since 2009, according to official Land Registry figures for March.

House prices across the UK fell by 0.2% in March, with prices dropping across much of the south of England.



Property experts in London said buyers are “sensing blood in the water”, with sellers forced to cut prices steeply to ensure a sale.

Jonathan Hopper of Garrington Property Finders said: “London is paying a painfully high price for its stellar run of price rises and a correction is now under way in several parts of the capital.

“Sellers are being forced to trim their expectations and astute buyers are increasingly sensing blood in the water.”

via The Guardian

Bank of Canada (BoC) Expected to Hold Rates Next Week

Normally, we’d preview the Bank of Canada’s next policy decision closer to the actual date. But all the relevant data has been published, so why wait? Unless the central bank scraps its story, it will leave the benchmark rate at 1.25 per cent on May 30.


usdcad Canadian dollar graph, May 23, 2018

Canada’s dollar dropped half a cent against its U.S. counterpart on Friday, probably because new readings on inflation and retail sales suggest the economy is chugging along, not racing ahead at a pace that would alarm policy makers. The prices of financial assets linked to short-term interest rates put odds of an interest-rate increase next week at about 25 per cent.

Via Financial Post

EU Still Expanding But Growth is Slowing Down

Euro zone economic growth slowed much more sharply than expected this month, a business survey showed, which along with weaker inflation has intensified concerns there will be no return to the bloc’s recent boom times.



The European Central Bank will end its asset purchase program this year and hike interest rates in 2019, a Reuters poll found last month, although policymakers may be concerned to see inflation easing along with growth.

While the expansion still remained relatively strong, growth slowed to a 20-month low in the bloc’s largest economy, Germany, and the lowest in a year in a half in No. 2 economy France, according to the latest IHS Markit purchasing managers’ surveys.

via CNBC

UK Inflation Falls to 12 Month Low

UK inflation unexpectedly fell further last month to the lowest level in more than a year, as lower airfares provided some relief for cash-strapped Britons.



The consumer price index dropped from 2.5% in March to 2.4%, according to the Office for National Statistics (ONS). Economists had expected the annual rate of growth in prices to remain unchanged.

This decline will be welcomed by consumers under sharp pressure from rising prices since the Brexit vote, when a sudden drop in the value of the pound pushed up the cost of imported goods.

via The Guardian

Safe Haven Currencies Rise on Trade Uncertainty

Investors sold equities on Wednesday and raced to buy Japanese yen and government bonds from the United States and Germany on fears that setbacks to U.S-China trade talks would undermine increasingly fragile-looking world growth.



The yen JPY=EBS rose more than 1 percent against the dollar, U.S. bond yields, which move inversely to price, fell to eight-day lows.

World shares meanwhile slipped half a percent to a two-week low as weak euro zone data added to negative sentiment following U.S. President Donald Trump’s comments on the crucial trade talks.

Investors were also eyeing Turkey and Italy, with the former seemingly headed for a full-blown economic crisis as the Turkish lira plunged to new record lows.

Italian borrowing costs resumed their rise to hit new multi-month highs on fears that an incoming coalition will sharply boost government spending.

via Reuters

Trump Hints at Upcoming Good News for US Auto Workers

U.S. President Donald Trump, who has repeatedly pledged to revive American manufacturing, on Wednesday said “big news” was coming that would be welcomed by U.S. autoworkers but he gave no details.

“There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!” Trump said in a tweet.



The United States is in the middle of a renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, but the talks have been stalled by a dispute over auto provisions.

via Reuters

US Single Home Sales Fell in April

Sales of new U.S. single-family homes fell less than expected in April, but data for the last three months was revised lower.

The Commerce Department said on Wednesday new home sales dropped 1.5 percent to a seasonally adjusted annual rate of 662,000 units last month. March’s sales pace was revised down to 672,000 units from the previously reported 694,000 units.



Economists polled by Reuters had forecast new home sales, which account for about 11 percent of housing market sales, falling 2.0 percent to a pace of 679,000 units in April.

The government also revised sales data going back to 2013. The benchmark revisions showed sales in the first three months of the year not as strong as previously reported.

New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They rose 11.6 percent from a year ago.

Via CNBC

U.S is a Net Energy Importer from Canada

Canada is the largest energy trading partner of the United States, based on the combined value of energy exports and imports. Although the value of bilateral energy trade with Canada has varied over the past decade, driven primarily by changes in the prices of oil and natural gas, the overall structure of bilateral energy trade flows has changed relatively little, with the value of U.S. energy imports from Canada consistently exceeding the value of U.S. energy exports to Canada by a large margin. Increasing energy commodity prices in 2017 led to growth in the value of both exports to and imports from Canada.

Based on the latest annual data from the U.S. Census Bureau, energy accounted for $18 billion, or about 6%, of the value of all U.S. exports to Canada. Energy accounted for $73 billion, or about 24%, of the value of all U.S. imports from Canada in 2017, up from 19% in 2016. Canada is the main source of U.S. energy imports and the second-largest destination for U.S. energy exports behind only Mexico.

Crude oil accounts for most U.S. energy imports from Canada, averaging 3.4 million barrels per day (b/d) in 2017. Canada is the largest source of U.S. crude oil imports, providing 43% of total U.S. crude oil imports in 2017. The value of U.S. crude oil imports depends on both volume and price. In 2017, the value of U.S. imports of Canadian crude oil increased, reaching $50 billion, as a result of both an increase in oil prices and an increase in volume. Canadian crude oil imported by the United States is largely produced in Alberta and consists mainly of heavy grades shipped primarily to the Midwest and Gulf Coast regions.

Until the removal of restrictions on exporting U.S. crude oil in December 2015, virtually all U.S. crude oil exports went to Canada. Since the United States began exporting more crude oil to other countries, Canada’s share of U.S. crude oil exports has fallen, although Canada still remains the largest destination for U.S. crude oil exports. In 2017, for the first time, the United States exported more crude oil, in total, to other countries (794,000 b/d) than it exported to Canada (324,000 b/d). U.S. crude oil exports to Canada are typically light sweet grades that are shipped to the eastern part of the country.

Bilateral petroleum products trade with Canada is relatively balanced in both volumetric and value terms. In 2017, Canada was the destination for 516,000 b/d of petroleum products, or 10% of all petroleum products exported from the United States. These exports were valued at more than $9 billion in 2017. However, the mix of petroleum product flows between the United States and Canada varies by product and region. For example, the United States is a net importer of gasoline from Canada, with significant volumes flowing from refineries in Eastern Canada to serve markets in the Northeast United States.

In contrast, very little of the petroleum products exported from the United States to Canada are finished transportation fuels. Pentanes plus, liquefied petroleum gases, and other oils constitute most U.S. product exports to Canada. Some of these products are used as a diluent to enable pipeline movement of heavy crude oils produced in Canada. Overall, U.S. petroleum product exports to Canada and other destinations have increased over the past decade.

Bilateral natural gas trade between Canada and the United States is dominated by pipeline shipments. Natural gas imports from Canada increased to 8.1 billion cubic feet per day (Bcf/d) in 2017, accounting for 97% of all U.S. natural gas imports. Total natural gas imports from Canada were valued at $7.3 billion in 2017. Most of Canada’s natural gas exports to the United States originate in Western Canada and are shipped to U.S. markets in the West and Midwest.

U.S. natural gas exports to Canada, which increased to 2.5 Bcf/d in 2017, mainly go from New York into the eastern provinces. Increases in pipeline capacity to carry natural gas out of the Marcellus and Utica shale formations increased flows of U.S. natural gas into Canada, reducing pipeline imports from Canada and increasing U.S. pipeline exports to Canada.

Electricity accounts for a small but locally important share of bilateral trade. In 2017, the value of U.S. imports of electricity from Canada increased for the second straight year, reaching $2.3 billion. The United States imported 72 million megawatthours of electricity from Canada in 2017 and exported 9.9 million megawatthours, based on data from Canada’s National Energy Board.

U.S Energy Information Administration

Italian Bond Yields Off Highs after Six Days of Selling

Italian government bond yields came off 14-month highs on Tuesday as the market paused after six days of heavy selling on concerns over the high-spending policies mooted by a potential coalition government in the euro zone’s third-largest economy.

The likelihood of a new Italian government being formed by the 5-Star Movement and the far-right League has pushed Italian 10-year yields up nearly 70 basis points since the start of the month, potentially making the debt attractive again for some.

“We’re in the realms of markets being very technical, and the fact that there’s no real news overnight is an opportunity for some to add a little to their positions,” said Mizuho strategist Peter Chatwell, though he cautioned against reading too much into the moves.

Italy’s 10-year government bond yield fell 2.5 basis points to 2.31 percent, well below the 14-month high of 2.418 percent hit in earlier trade.

The closely watched Italy/Germany 10-year bond yield spread hit 189.6 bps before settling at 182 bps, still wider than any closing price since June 2017.

Spanish and Portuguese yields also came sharply off the multi-month highs touched on Monday, dropping 8-12 basis points.

Yet they provide an alternative for Italian BTPs given the uncertainty around that country’s future, according to Mizuho analysts.

“We expect Spanish bonds to find demand as a BTP substitute, and see best value in the five-year sector on the curve,” they said in a note.

Italy’s M5S and the League have proposed Giuseppe Conte, a little-known law professor, as prime minister to lead the coalition, which many fear will boost spending and raise the country’s debt levels.

“Conte looks rather like a puppet for the 5-star and League leaders to push through their agenda,” said Commerzbank strategist Christoph Rieger.

He added that though the programme put forward by the two parties does not appear as radical as first rumoured, it is clear that Italy is now “clearly abandoning all fiscal restraint”.

The cost of insuring against Italian government debt souring was at its highest in 7 months with Italy’s 5-year credit default swaps (CDS) rising to 142 bps, according to IHS Markit.

Elsewhere, higher-grade euro zone government bond yields moved 1-4 bps higher as sentiment improved across markets, and European stocks rallied as well.

The yield on Germany’s 10-year government bond, the benchmark for the region, was 4 bps higher at 0.56 percent.

Reuters