Morning Wrap (22.05.2024)

Asian and Pacific indices are experiencing a mixed session. The Japanese Nikkei 225 index is down 0.60%, while the Australian S&P/ASX200 is trading 0.20% lower. Chinese indices are gaining between 0.15-0.35%. European futures also indicate a flat opening for the cash session, with DAX and UK100 futures fluctuating between +/-0.05%.

In the forex market, movements are relatively moderate in the first part of the day, except for the NZD, which is gaining the most among the G10 currencies following the RBNZ decision. On the other hand, JPY and CHF are among the weakest currencies.

The Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged for the seventh consecutive meeting and signaled that policy would need to remain restrictive for an extended period to curb persistent inflation. The RBNZ maintained the official cash rate at 5.5% as expected. New bank forecasts indicate that rate cuts will start in the third quarter of 2025 instead of the second. The NZD is gaining between 0.3% and 0.5% against most other G10 currencies.

RBNZ Governor Adrian Orr sounded slightly less hawkish at the post-decision press conference than the RBNZ statement. As a result, we observe a slight rebound in the NZD. The governor expects inflation to fall to the target by the end of 2024.

Japanese exports rose for the fifth consecutive month in April, but the data was worse than expected. Despite this, trade data dampens policymakers' hopes that exports will offset weak domestic consumption, as export volumes remain low.

Japan's trade deficit in April increased by nearly 8% compared to the previous year. Exports amounted to 8.98 trillion yen (57 billion USD), while imports reached 9.4 trillion yen (60 billion USD).

In the cryptocurrency market, we observe a continuation of slight declines after dynamic increases two sessions ago. Bitcoin is down 0.40% to 39,800 USD, and Ethereum is down 0.90% to 3,750 USD. The market has been more nervous since yesterday, ahead of the decision on the spot ETF for Ethereum, which is expected tomorrow, and Nvidia's report after the close of today's US session.