Markets Quiet Overnight; Dollar Weaker; Yen Up

USD

Currency markets were mostly quiet overnight as most of Europe remains closed for the Easter holiday. The U.S. Dollar is under modest pressure following lower than expected inflation data on Friday morning. This morning’s data will not help after Empire manufacturing failed to meet expectations. Growth was registered at just 5.2, down from 16.4 in the month prior.

Despite a lull in financial news, there is plenty of geopolitical headlines. Turkey narrowly voted to amend it constitution making President Erdogan a de facto dictator. North Korea launched an unsuccessful ballistic missile test. Vice President Mike Pence visited the Korean/North Korean border and encouraged China to take a tougher stand on the rogue nation.

Markets should be back into full swing tomorrow as the Europeans come back from vacation. Housing starts and industrial production will cross the wires tomorrow morning before a fairly light day on Wednesday. Jobless Claims and the Philly Fed are set for Thursday, while Existing home sales will round out the week on Friday.

 

AUD 

The Australian and New Zealand dollars are stronger in light trading this morning on the back of strong Chinese data. Chinese GDP increased 6.9% in the first quarter of the year, slightly higher than expectation. In addition, the National Statistics Bureau said the country’s production of crude steel expanded 1.8% from a year earlier. China is a major export market for both Australia and New Zealand.

 

JPY 

The Japanese yen climbed to its strongest level in five months versus the U.S. dollar as investors sought the relative safety of the yen. As stated above, tensions between the U.S., China and North Korea have intensified. Bloomberg is reporting that two people familiar with the White House’s thinking said Trump is willing to consider “kinetic” military action, including a sudden strike, to counteract Pyongyang’s series of destabilizing actions.

This weekend’s French elections have also led to a slight risk-off sentiment in Europe.