Markets sole focus this week has been on the EU summit. Investors have been expecting the outcome to â€œdefine the next short-term trend before ECB policy expectations come into play next week.â€ The market has been squeezed ever since this mornings early announcement. The price action confirms that investors expectations were rather modest and that overall market positioning were leaning towards a disappointing outcome. Not getting what they were anticipating should be capable of squeezing more upside out of this market, even if its a holiday shortened trading week.
Now its all about market confidence in the Euro leaders â€œto break the bank-sovereign loopâ€ and their success in working together to strengthen the financial architecture. If the market ends up reaching a tad too far on this first go around, the bears will be expected to take control again quickly.
Below are some other highlights of the week:
- INR: India loosens restrictions on foreign bond buying to help the INR. The RBI has increased foreign investment limits for government and corporate bonds. The market had come to expect greater liberalization, without it the INR has underperformed.
- TWD: Thailandâ€™s May exports rose +7.7%, y/y, against consensus for a modest +0.5%, y/y increase, driven mostly by stronger gains in cars and electronic exports. Not so good was Taiwanâ€™s IP contracting last month, declining -0.21%, y/y.
- NZD: Graeme Wheeler was named RBNZ governor successor in September. He becomes the fourth consecutive external appointment as RBNZ governor. He is expected â€œto hold a cautious approach with a strong focus on external risks.â€ Markets are pricing in rates on hold for the remainder of this year.
- PHP: The Philippine trade deficit narrowed to \$135m in April from \$1b in March. Imports fell -13.7%, y/y, while an earlier release saw exports rising +7.6%, y/y.
- JPY: Japanâ€™s Corporate Service Price Index rose +0.1%, y/y, in May after rising +0.2% in the previous month (the second consecutive month of gains).
- CNY: The Chinese Conference Board said that its Leading Economic Index rose +1.1%, to 235.1 in May after rising +0.9% in April and +0.8% in March.
- NZD: Kiwi trade surplus narrowed slightly in May to +NZD300m from +NZD335m in April. Year-to-date, the trade balance recorded a-NZD805m deficit.
- KRW: Korean manufacturersâ€™ confidence fell to the lowest level in four-months as the index of sentiment for July dropped to 84 from 86 in June.
- NZD: The NBNZ survey on the activity outlook in New Zealand fell to 20.8 in June from 34.9 in May (the lowest reading in 12-months). Not helping matters was business confidence also falling to 12.6 in June from 27.1 in May.
- AUD: Aussie HIA New Home Sales increased by +0.7%, m/m, in May following a +6.9% gain in April.
- AUD: The number of Aussie job vacancies fell by -5.3% in the three months to May. This compares with an increase of +0.7% recorded in April.
- JPY: Japanâ€™s retail sales rose more than forecast in May, advancing +3.6%, y/y, against the consensus forecast for a +2.9% increase and a revised +5.7% gain in April.
- KRW: Koreaâ€™s current-account surplus widened in May to a six-month high of +\$3.6b, compared with a revised +\$1.7b surplus in April.
- JPY: Japanâ€™s core-CPI (ex-food and energy) declined by -0.1%, y/y, last month compared to a revised +0.2% in April. IP fell by -3.1%, m/m, following a decrease of -0.2% in April. However, Analysts note that on a yearly basis it increased +6.20% in May compared to +12.9% in April.
- CNY: FT is reporting that China is planning to create a â€œspecial zoneâ€ to experiment with currency convertibility in Shenzhen. The measure would enable Hong Kong banks to lend RMB directly to companies in the special zone. Currently only allowed to lend in the Hong Kong region.
- AUD: Aussie private sector credit increased by +4.0%, y/y, in May from +3.8% in April.
- NZD: Kiwi building permits declined -7.1%, m/m, in May after falling a revised -7.6% in April.
- SGD: Singapore’s bank loans and advances rose by +22.5%, y/y, in May from +24.0% in April.
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