CURRENCY MARKET WRAP
As of Thu, May 9, Singapore Time zone UTC+8
Dollar Index -0.00%, 97.58
USDJPY, -0.20%, $110.03
EURUSD, +0.05%, $1.1197
GBPUSD, -0.43 %, $1.3012
USDCAD, +0.03%, $1.3474
AUDUSD, -0.31%, $0.6992
NZDUSD, -0.30%, $0.6583
U.S. Treasuries lost steam, sending yields higher, as equities gained traction during the day. The 2-yr yield increased two basis points to 2.30%, and the 10-yr yield increased three basis points to 2.48%. The U.S. Dollar Index was unchanged at 97.58. WTI crude rose 1.2% to $62.12/bbl following bullish inventory data out of the Energy Information Administration.
Trump pumped some optimism into the market after he tweeted that China’s Vice Premier was coming to Washington to make a deal. Press Secretary Sarah Sanders later chimed in that the White House received an indication that China wants to make a deal. Both remarks sent U.S. stocks higher in a knee-jerk reaction despite both statements being nearly identical and neither giving the market any new information. China had already confirmed it was planning on coming to the U.S. this week, and it wouldn’t have done so if it didn’t intend to work on a trade deal. The one new component, is that Reuters indicated sources said China backtracked on nearly all aspects of a trade deal last week. The report raises uncertainty about when, if it all, a deal might get done with the tariff rate on $200 billion of Chinese imports set to increase on Friday.
In a unanimous decision, the RBNZ has cut the Official Cash Rate to 1.5% from 1.75%. The latest Monetary Policy Statement indicates the possibility, but not certainty of a second OCR cut by early next year. The forecast now sees the OCR bottoming at 1.4% before climbing back up to 1.9% by mid-2022. “The reason for the cut is global economic growth has slowed,” Adrian Orr said in an address to a parliamentary committee. RBNZ has a dual mandate of keeping medium-term inflation between 1-3% and supporting maximum sustainable employment. Orr said if the bank had left interest rates on hold, employment would have eased off. Kiwi was offered after the news, trading to a low of 0.6529, finally closing at 0.6583.
S&P500, -0.16%, 2,879.42
Nasdaq, -0.30%, 7,617.55
Nikkei Futures, -2.03%, 21,495.0
S&P 500 declined 0.16% on Wednesday, as investors remained cautious about a U.S.-China trade deal. The benchmark index was on pace to end a two-day slide, being up as much as 0.5% on optimism that a trade deal may still get done, but the recovery attempt faded in last 30 minutes of trading. Most of the S&P 500 sectors finished little changed. The utilities (-1.4%) and communication services (-0.4%) sectors underperformed, while the health care (+0.1%) and real estate (+0.1%) sectors outperformed.
Shares of Lyft (LYFT 52.91, -6.43) dropped 10.8% after the company missed earnings estimates by a wide margin. The stock was also pressured by many ride-hailing drivers around the world turning off their apps Wednesday in protest for better pay, benefits, and worker protections.