HiFX Morning Update, May 16 2018

The NZDUSD opens at 0.6857 (mid-rate) this morning.

The USD outperformed overnight as Bond prices fell and Treasury yields spiked higher, following solid economic data releases out of the US.

The US Commerce Department retail sales report showed both retail sales and core retail sales (excluding automobiles) increased by 0.3% in the month of April following March’s upwardly revised respective 0.8% and 0.4% increases.

The Empire State manufacturing index jumped to 20.1 in May following a 15.8 reading in April and well ahead of the projected 15.0 result.

Home builder confidence in the US unexpectedly increased in May with NAHB/Wells Fargo Housing Market Index rising to 70 following a downwardly revised 68 reading in April. The index had been expected to remain unchanged from the previously reported 69 reading in April.

The US 10-year Treasury yield spiked to 3.09%, its highest level since 2011, while yield on the US 2-year note hit a high of 2.589 percent, its highest level since August 11, 2008.

The EUR came under pressure against the majors following weaker than expected economic data releases, with Eurostat reporting gross domestic product in the Euro-zone region grew 0.4% in Q1 slower than the 0.7% increase seen in Q4 2017.

Weak trade data has seen Germany's economic growth halved in Q1 with the Destatis report showing GDP grew at 0.3% in Q1 following Q4’s 0.6% expansion.

Strong jobs growth in the UK which has pushed the UK’s employment rate to a fresh record in the first three months of 2018 has failed to push up wage growth. The Office for national Statistics reported employment rose by 0.4 points to 75.6% in the latest quarter, the highest since modern records began in 1971, but wage growth for the same quarter increased by 2.6% on a year earlier, slower than the annual rise of 2.8% recorded in the three months to February, and short of the forecast 2.7% increase.

Global equity remain are mixed- Dow -0.75%, S&P 500 -0.87%, FTSE +0.16%, DAX -0.06%, CAC +0.23%, Nikkei -0.21%, Shanghai +0.57%.

Gold prices are sharply lower, down 1.9% trading at $1,288 an ounce. WTI Crude Oil prices have pushed higher, up 0.9% trading at $71.31 a barrel.

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