Recent US military actions, such as the airstrike in Syria, the movement of an aircraft carrier strike group toward the Korean Peninsula and the dropping of “the mother of all bombs” on ISIS in Afghanistan has led to rising tensions amongst some of the world superpowers.
The rising regional tensions have lifted the markets’ risk aversion sentiment. Investors are turning away from riskier assets towards safe havens, resulting in the weakening of US equity markets. Monday April 17, saw spot gold surge to the highest level of 1295.37 since November 9, it has rallied 2.6% since Syria strike on April 7.
The first round of the French election is to be held this Sunday April 23. The latest polls conducted between April 12-14 showed a tightening race: Macron, Le Pen are both 22%, Macron and Le Pen got a lower share of the vote compared to 23% from a previous poll. The far-left candidate Jean-Luc Melenchon, has slipped to third position, with 20% of voters, which surpassing Fillion’s 19%. Jean-Luc Melenchon is the only candidate among the four whose share of vote saw an increase recently. The difference of votes between the 4 candidates is less than 3% which poses more uncertainty to the election.
The US retail sales and CPI data for March released last Friday both underperformed. Retail sales (MoM) fell to -0.2%, retail sales for February was revised downward to -0.3% from 0.1%, marking the first decline since August 2016. The drop was partially caused by the recent decline in automobile and petrol sales. However, consumer electronics and clothing sectors saw a growth. Retail sales exclude autos for March (MoM) fell to 0.0%, marking the lowest growth since August 2016.
US CPI and core CPI (YoY) for March were 2.4% and 2.0% respectively, marking the lowest growth since January 2017 and November 2015. Per CME’s FedWatch tool, after the release of US retail sales and CPI data for March, the probability of a rate hike in June has dropped to 46.6%.
The Bank of Japan Governor Kuroda stated on Monday April 17 that employment and wages are improving steadily, consumer spending saw a pickup. The positive economic indicators continue to strengthen JPY ahead of the upcoming BoJ’s meeting on April 27. Monday USDJPY hit the lowest level of 108.12 since November 15.