June 19, 2019 01:48 JST: "Real Top Trading" [From Mr. YEN Kura's newsletter]
From the YEN Zō-san investment newsletter "Real Top Trading" provided by GogoJungle, a portion from this morning’s delivery is introduced.
Asia time showed that the RBA minutes indicated a possibility that further rate cuts could be appropriate. In response, the AUD fell to 0.6832, and AUDJPY fell to around 73.94. The decline in AUDJPY triggered a fall in USDJPY, and the Nikkei stock average moved to a risk-averse stance, down about 150 points.
In particular, the Mothers index fell 18.34 points, down 2%. May euro area CPI rose 1.2% year over year, down from 1.7% in April, the lowest since April 2018. Since ECB inflation target is 2%, that figure is quite weak. Germany’s ZEW economic sentiment index for June dropped to -21.1 from -2.1 in the previous month, vs. expectations of -5.9. The global economy’s outlook is weighing on sentiment.
In response to these, European early trading saw the Nikkei futures fall to 20,840 yen, and USDJPY declined to 108.20, signaling a risk-averse mood. However, Mario Draghi, ECB President, stated that if price growth remains weak and the target cannot be reached, the ECB would again implement rate cuts or loosen asset purchases.
Draghi’s remarks pushed EURUSD down to around 1.1185; Germany’s 10-year bond yield also fell to 0.33%, marking a new market low. Yet European equities rose, gradually shifting toward risk-on sentiment.
President Trump’s good telephone conversation with President Xi Jinping and the indication that a leaders’ summit will be held at the G20 Summit are accelerating risk-on momentum. With FOMC ahead, there is a rebound in risk-off behavior. This trend seems likely to continue until tomorrow.
We will keep a wait-and-see stance on trades.
YEN Zō’s Real-Time Newsletter “Real Top Trading” (Takeshi Tashiro)is quoted.
As the economy’s outlook worsens, attention is turning to whether Europe and the United States will begin cutting rates. Today, with the FOMC meeting concluding and the Federal Reserve Chair’s regular press conference, let's monitor U.S. interest rate trends. (Editorial)
