Less trade pessimism in some parts

3 minute read


Existing home sales are seldom the most eagerly-awaited US economic statistic but they were just about all investors had to look forward to on Tuesday. It turned out that they were down by 0.4% in April, the second successive fall and the fourth in the last six months. In other news, the Redbook survey found retail sales 1.2% higher on the month and 5.2% above the same week a year ago.

Corporate America continues to become progressively more agitated about the effects of the president's trade war. Footwear companies are the latest to join the protest, with 173 of them signing a letter that warns of the "catastrophic" impact of an extra 25% tariff which will mean a total tax of almost 100% on some items.


Euroland's statistical contribution on Tuesday was the European Commission's assessment of consumer confidence. The index was four fifths of a point higher at -6.5, "well above its long-term average" of -10.7.  There are no euro zone ecostats on today's agenda.

European Central Bank president Mario Draghi had a brief speaking engagement this  morning when he delivered the opening address at a seminar on "Monetary policy in an incomplete Monetary Union". The ECB released no text of his comments but the EUR did move higher following the address. It is 0.1% higher on the day against the USD.


The Loonie shrugged off a 1.4% decline in the price of WTI crude, refusing to follow oil lower. It is 0.2% firmer against the USD.

The move was driven by improved sentiment following last week's announcement that the White House would rescind protectionist tariffs on Canadian and Mexican steel and aluminum, Investors are now optimistic that the three parties will soon ratify the United States-Mexico-Canada Agreement, or USMCA.


UK economic data this morning showed headline inflation accelerating by less than expected to 2.1%. Public sector borrowing came in below forecast in April. Investors were not impressed. The GBP is down by another 0.3%, taking to 2.5% its accumulated loss for May.

Absent outrageous numbers, investors could not give a jot about the UK ecostats. They are transfixed by the game-of-thrones battle going on among the upper echelons of the ruling Conservative party. In the latest instalment, prime minister Theresa May revealed her "new bold offer" to parliament only to have it ridiculed by all and sundry. Investors have no idea what will happen next but they do not expect it to be pretty.  


The yen saw some action on Tuesday, weakening through most of the New York session. It steadied in the evening and recovered overnight for a net loss of 0.3% to the USD. The trade optimism that helped the CAD dampened investors' appetite for the safe-haven JPY.

Japanese economic data released overnight were apparently positive for the JPY. At least, it moved higher following their release. But the numbers were not all good. Imports went up by 6.4% in April while exports fell 2.4%, knocking a big hole in the trade surplus. Machinery orders were stronger than expected though: They unexpectedly increased by 3.8% in March and the annual 0.7% decline was much more palatable than the forecast 3.4% drop.

Sign up for a free account

Sign up for a free account

Access our convenient and secure online platform to process your international payments. Manage beneficiaries and view payment status and history at the click of a button.

Find out more
FX business solutions

FX business solutions

We provide tailored services to help companies make international payments and manage their foreign exchange risk

Find out more