Morning, this is the daily market commentary. Thanks for reading.
Markets are bracing themselves for US president Trump’s press conference expected later today for his decision on what actions to take against China and Hong Kong. The Chinese Parliament yesterday passed the controversial national security bill,which is seen as eroding Hong Kong’s autonomy from China.
US Secretary of State, Mike Pompeo has already warned, that the legislation would endanger Hong Kong’s special status with America and speculation is running rife about trump’s options on punishing China. The cautious mood led most Asian indices to close a negative territory on the last trading day of May and US and European stock futures were also in the red. Moreover the limited sell-off suggests investors are not anticipating Trump to announce anything too harsh and the most likely outcome is sanctions on Chinese officials and businesses doubts about how punitive Trump’s actions will be sparked only a muted reaction among safe havens with the Japanese yen being the main beneficiary of safety flows.
The yen was up almost 0.5 percent versus the,US dollar which slid to two and a half month flows against a basket of currencies on Friday. The dollar weakness was broad-based as it came under pressure from fresh speculation that the Federal Reserve’s next crisis move will be to implement yield curve control. Treasury yields were lower across the curve on Friday weighing on the greenback and accentuating the euros advances the single currency is on track for a fourth straight day of gains, following the announcement this week that a 750 billion euro virus recovery fund has helped turnaround sentiment for the eurozone economy. Fed chairman Jerome Powell who is due to participate in a panel discussion at 1500 GMT could drop further hints. Policymakers actively considering yield curve control possibly pressuring the dollar even more another danger will be,the personal income and spending numbers,out of the US which are expected to show a record monthly drop in consumption in April.
However, the data may not matter a great deal if Trump surprises with a much more stringent response on China as markets,appear to be under pricing the risk of a major flare-up in us-china tensions this,was today’s daily market comment thanks,for joining us.