Sluggish China Trade numbers which were released yesterday, again created demand for the safe haven currency. The U.S. dollar sparked to the day’s high of 104.2990 after disappointing Chinese trade data hit sentiment.
According to data released earlier on Wednesday, China’s trade surplus fell to a 13-month low in May, primarily due to a surprising decline in exports as global demand for Chinese goods dried up.
According to data released on Wednesday, the U.S. trade imbalance increased in April to its highest level in eight years as imports of goods increased while exports of energy products decreased.
Increasing by 23.0% to $74.6 billion, the trade imbalance. The trade gap for March was reduced from the previously reported $64.2 billion to $60.6 billion thanks to updated data. The government updated the trade data for products from 2018 while making revisions to the trade data for services from 2017.
Bullions had a volatile trade yesterday. After hitting the day’s high of 60098, Gold prices retreated and settled at 59503, down by 0.80%. Silver retreated from the day’s high of 73125 and settled at 0.32%.
Base metals also remained indecisive following the weak China trade data. Copper prices settled at 721.05, down 0.19%. Aluminum and Lead prices settled almost flat. While Zinc was the best performer amongst other base metals, it settled with an intraday gain of 1.73% at 214.40.
Crude oil jumped more than 1% as Saudi Arabia’s plans for deep output cuts more than offset demand woes stemming from rising U.S. fuel stocks and weak Chinese export data.
U.S. crude stocks fell by about 450,000, according to data from the Energy Information Administration, compared with estimates for a 1 million build.
Diesel inventories rose by 5.1 million barrels, while markets had estimated a build of 1.33 million. Gasoline inventories also rose more than expected at 2.8 million barrels, compared with estimates for a build of 880,000 barrels.
Brent crude is up by 0.87% to $76.74. U.S. West Texas Intermediate crude was at $72.42 a barrel, up 1.43%. MCX crude Future is up by 1.09% and settled at 6004.00
Economic data released Early in the morning
Japan’s gross domestic product (GDP) expanded an annualized 2.7% in January-March, much higher than a preliminary estimate of a 1.6% growth and much higher than economists’ median forecast for a 1.9% rise.
According to figures issued by the Cabinet Office, the January-March expansion equates to a 0.7% quarter-over-quarter increase, up from an initial reading of 0.4% and economists’ expectations for a 0.5% increase.
As the trade deficit decreased and revenue from foreign investment increased, Japan achieved a current account surplus for the third consecutive month in April, according to government data, allaying concerns about the country’s balance of payments declining.
The current account stood at a 1.9 trillion yen ($13.58 billion) surplus in April, Ministry of Finance data showed on Thursday, beating economists’ median forecast for a surplus of 1.66 trillion yen in a Reuters poll.
South Korea’s finance minister said on Thursday this year’s economic growth would likely be lower than the government’s previous projection of 1.6%.
The government will “slightly lower” the growth forecast for this year when it releases its biannual policy plans in late June or early July, Finance Minister Choo Kyung-ho said during a media event.
Economic data and events to watch ahead
Eurozone
At 11.00 am- French Final Private Payrolls q/q to be released. Data is foreseen at 0.2%, unchanged, from the previous 0.2%.
At 2.30 pm Final Employment Change q/q with a forecast to come unchanged at 0.6%, from the previous 0.6%.
At 2.30 pm – Revised GDP q/q is set to release with a forecast of 0.0%, lower than 0.1%.
Both the above data could have a neutral impact on the Euro.
U.S.
At 6.00 pm – Unemployment Claims are to be released with a forecast to increase by 236k from the previous week’s 232k.
At 7.30 pm – Final Wholesale Inventories m/m, data is foreseen at -0.2%, unchanged from the previous.
At 8.00 pm- Natural Gas Storage, forecast is to increase by 115B from the previous week’s storage of 110B Above data could have a negative impact on the dollar.
All the above numbers will have a neutral impact on the dollar.
India
At 10.00 am – the Reserve Bank of India is set to unveil its policy decision.
According to a Reuters poll of experts, the Reserve Bank of India is anticipated to maintain its benchmark interest rate at 6.50% for the remainder of 2023. The RBI’s medium-term target of 4% for inflation is not expected to be reached for at least another two years, despite the fact that it reached an 18-month low of 4.70% in April.
Investors may anticipate a “hawkish pause” from the RBI rather than a “dovish pause” if inflation remains that persistent, especially in light of the hawkish surprises from Australia and Canada this week.
Any rate hike decision will have a positive impact on Rupee or vice versa