Month-End Profit-Taking Weighs On Equities As The Euro Pops Above $1.11

Overview: The announcement that President Trump will hold a press conference on China later today rattled investors yesterday after they had earlier shrugged off the escalation of tension between the US and China to take the S&P 500 up to its highest level in nearly three months. The S&P 500 reversed and settled on its lows, and this carried over into today's activity, which also may be reflecting month-end adjustments. Equity markets in the Asia Pacific region were mixed, with Japan, Hong Kong, Australia, and Taiwan seeing selling pressure. Still, the Nikkei finished the week with more than a 7% gain, and Australia's rose 4.7%. The Dow Jones Stoxx 600 is snapping a four-day advance today, led by energy, consumer discretionary, and finance sectors. With a 1.25% loss near midday, the benchmark is still up nearly 3.2% on the week. US stocks are trading lower, and the S&P 500 is up 2.5% for the holiday-shortened week coming into today. The US dollar is softer against most of the major currencies, and the euro rose to almost $1.1140, its best level since the end of March. Emerging market currencies are mixed, while the JP Morgan Emerging Market Currency Index gained a little more than 1% this week after a 2.4% gain last week. Gold is consolidating near $1725. It settled last week near $1734. Oil is a little heavy after a sharp rise in US inventories. The July WTI futures contract is near $32.50 after closing last week around $33.25.

Asia Pacific

Honk Kong dollar forward points eased a little but remain elevated. The three-month forward points are a bit below 170 points, down from 213 at the end of last week. It was near 65 points in the middle of the month. The 12-month forward points are near 645. It was quoted near 768 a week ago, and 221 two weeks ago. The Hong Kong stock market eked out a minor gain on the week (-0.15%).  

The PBOC set the dollar's reference rate at CNY7.1316. The bank models implied about CNY7.1324. There was some intra-week volatility, but the dollar is finishing the week little changed. It is near CNY7.14 now and CNY7.1365 a week ago. The offshore yuan shows a bit more pressure. The dollar is trading a little above CNH7.16, and a week ago, the dollar settled near CNH7.1485.    

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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