Asia morning update

The conclusion of the French Presidential election and rosy US labour data from last week sets markets up for a positive open at the start of the week.

French flag
Source: Bloomberg

The day ahead carries with it several data updates that is likely to be the key focus.

It had been another case of “buy the rumour, sell the news” with EUR/USD touching a six-month high at $1.1023, only to be sold to $1.096 levels when last checked at 8:30am Singapore time. The expected win of centrist Emmanuel Macron in round two had generated only small upsides for the currency pair though further relief to equity markets could come.

Cross movements saw the USD index inching up on the EUR move, trading just below 98.80 this morning. Reactions from gold had been interesting with prices climbing from the near 2-month low this morning. The market had likely looked past the event and provided good buying of gold upon the breach of the 100-day moving average. 

Meanwhile April’s labour market update in the US had been the keynote focus for markets at the end of the previous week. Although Federal Reserve Chair Janet Yellen’s speech shed little light upon her economic outlook, the set of data had spoken for themselves. The strong surprise on the upside for non-farm payrolls at 211k and a near-10 year low unemployment rate likely quelled recent concerns of data weakness.

This falls in line with the Fed’s latest view that the first quarter growth slowdown had been ‘transitory’ and certainly reinforces the market’s conviction of a June hike. The probability of a June hike was recently seen rising to 100% according to Bloomberg’s computation based on Fed fund futures, and up at 83.1% according to CME Group.

The strong jobs data had propelled US markets to a fresh all-time high on Friday and this optimism is expected to be contagious for Asian markets on Monday. Markets in Asia are also expected to benefit from the surge in crude oil prices last week. Early movers were seen in gains this morning with Hong Kong and the local Singapore bourse expected to trend accordingly. Specifically, Japan markets had returned from the Golden Week holidays and clocked upsides of over 1.50% when last checked. This comes as no surprise with the USD/JPY climb in the market’s absence.

For the day ahead, the focus is likely to concentrate on China’s April trade update for the Asian session. Data updates including Australia’s March building approvals and Taiwan’s April trade data will be expected. Germany’s March factory orders will also be due today while Federal Reserve Cleveland President Loretta Mester will speak on US economic outlook in US hours.

Yesterday: S&P 500 +0.41%; DJIA +0.26%; DAX +0.55%; FTSE +0.68%

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