Weekly Market Review - May 6-10
Japanese Yen was the best performing currency this week, gaining 1.28% against USD and 0.94% against the euro. The currency is supported by the re-escalation of the US-China trade war, which pushes investors to safer assets.
In the cryptocurrency market, Bitcoin has demonstrated an impressive rally, exceeding the psychological mark of $6,000 for the first time this year.
Here are the most important events that moved the markets this week:
Australia’s Central Bank Keeps Rates Unchanged
The Reserve Bank of Australia (RBA) maintained interest rates at record lows and hinted to further cuts if the unemployment level failed to find its way lower. Australian retailers had their weakest quarter in about seven years, which forced the central bank to keep the rates unchanged at 1.50%. The RBA might stick with the dovish stance after Q1 inflation didn’t meet expectations in April. During the upcoming meeting, the bank will pay close attention to the labor market.
Australian Retail Sales Weakest in 7 Years
Australian retail sales demonstrated its worst quarter in about seven years in March, forcing the central bank to switch to a dovish mood. Australian Bureau of Statistics (ABS) said that the retail sales index had slightly increased by 0.3% in March compared to February’s growth of 0.9%, which was revised upward. Even so, the March growth was above analysts’ expectations, who predicted a 0.2% gain. For the first quarter, sales declined by 0.1%, which is the first downward move since 2012.
Western European Car Sales Fall 1%
Car sales in Western European countries declined 1% last month, as Brexit and general economic uncertainties affected the demand. Consulting firm LMC Automotive said that auto sales fell to 1.216 million vehicles in April from 1.228 million last year. On the other hand, the seasonally adjusted annualised rate of sales (SAAR) added 1.4% to 14.27 million cars. The worst results came from Germany and the UK, while Spain and Italy saw year-on-year gains in car sales.
Eurozone’s Composite PMI Affects GDP Growth
The growth of eurozone’s economy barely accelerates this quarter, as the poor performance in the manufacturing industry is putting pressure on the region’s services sector, HIS Markit found. Its Euro Zone Composite Final Purchasing Managers’ Index (PMI) fell last month to 51.5 from 51.6 in March. A reading below the 50 mark points to a contraction. IHS Markit estimates that the bloc’s economy is expanding at a quarterly rate of about 0.2%.
UK GDP Growth Meets BoE’s Expectations
The UK’s GDP grew in the first quarter of this year at a rate of 0.5%, in line with Bank of England’s expectations. The economy was boosted by manufacturers, who hurried up to deliver orders before the official date of Brexit, which hasn’t taken place to this day due to further delays. Year-on-year, the UK economic growth accelerated to 1.8% in the first quarter of 2019, compared to a 1.4% gain recorded in Q4 2018. This was the highest growth since Q3 2017.
Japan’s Economy Likely Fell Last Quarter
Japan’s GDP growth probably slowed in the first quarter of this year as corporate and consumer spending braked, according to a Reuters poll. Thus, the Q1 GDP is expected to have declined by 0.2% year-on-year, the surveyed 18 economists concluded. In the fourth quarter of last year, Japan’s economy expanded at a rate of 1.9% in annual terms. The GDP is negatively impacted by deteriorated exports, weaker capital spending, and lower private consumption, which accounts for 60% of Japan’s economy.
Upcoming News to Watch
Next week, Germany and Spain will release inflation data on Tuesday, which will show whether the EU’s economy in general is healthy enough. Besides, the eurozone will publish economic sentiment data during the same day.
On Wednesday, Germany will report on its GDP growth. The eurozone will also present GDP data along with changes in the unemployment rate.
On Friday, the eurozone will release inflation data, both in monthly and annual terms.
Euro is expected to show increased volatility due to the high number of macroeconomic indicators to be released.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.