US Dollar Gains Against Major Currencies as Stocks Slip in Asian Trading (Euro Open)
The US Dollar advanced against major currencies in overnight trading as stocks sold off across Asian exchanges on news that US Retail Sales unexpectedly fell in April. Swiss Producer and Import Prices are on tap in European hours.
Key Overnight Developments
• New Zealand Manufacturing Contracts for 12th Straight Month
• US Dollar Rises as Stocks Sell Off Across Asian Exchanges
The Euro trended lower in overnight trading, shedding as much as -0.6% against the US Dollar. The British Pound followed suit, slipping -0.4% against the greenback. The Dollar rose against major currencies as stocks sold off across Asian exchanges on news that US Retail Sales unexpectedly fell in April.
Asia Session Highlights
New Zealand’s Business NZ PMI rose for the second consecutive month in April, printing at 43.7 from 41.9 in the previous month. The reading remains below the “boom-bust” 50 reference level, suggesting the manufacturing sector contracted for the 12th consecutive month, albeit at a slower pace. Most notably, the New Orders component of the metric has advanced for two straight months since bottoming in February, raising hopes that firms have already seen the worst of the slump in overseas demand. The industrial sector employs about 19% of New Zealand’s labor force, so a rebound here would certainly help to boost hiring, promote spending, and help lift the smaller antipode out of the worst recession in over three decades.
Euro Session: What to Expect
Switzerland’s Producer and Import Prices are set to fall at an annual pace of -2.8%, the most in decade, for the second consecutive month in April. The reading suggests continued downward pressure on consumer prices, the headline inflation gauge, after CPI slipped into negative territory for the first time in 5 years in March and continued to contract in April. Weakening domestic conditions will add to external downward pressure on price growth: a survey of economists conducted by Bloomberg suggests that the economy will shrink -1.0% this year, threatening to entrench deflation expectations. This stands to commit the mountain nation to a long-term stagnation as consumers and businesses perpetually put off spending and investment to wait for the best possible bargain. It remains to be seen if the Swiss National Bank is able to stave off this dire scenario with aggressive monetary measures including quantitative easing and currency market intervention.
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