Asia Pacific markets are looking at a mixed day as conflicting currents drive trading. The Federal Reserve chair, Jerome Powell, fuelled optimism in his testimony to the Senate, and better retail sales data backed his words. In contrast, rising Covid-19 infection rates appeared to support the US dollar and gold as some investors sought safety.
The Fed’s support for corporate bonds helped erase growth concerns last week, after a cautious Fed economic outlook report initially weighed on sentiment. Mr Powell expanded on the Fed’s view overnight, favouring an immediate economic bounce as lockdown measures are lifted, followed by uncertainty. The affirmation of the bounce back theory was enough to send stocks soaring.
Crude oil markets bounced, and base metals were generally firmer. The growth positive moves were undermined by falling commodity currencies as the US dollar rose. The Japanese yen was the only major to hold ground against the greenback, although cryptos edged modestly higher after recent pressure.
Japanese trade data due this morning is expected to show 20%+ falls in both imports and exports in May. Singapore non-oil exports are forecast at -6.9%. Investors may follow global leads, “looking through” any weaker data but responding positively to stronger numbers. Tonight brings inflation reads in the UK and Canada, followed by US housing data.