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Morning Brief 05.04.2017

05 April 2017

U.S dollar is trading little higher against other currencies after the better than expected trade data.

According to U.s Commerce department, U.S trade deficit narrowed to 43.6 billion US dollar in February as compared to 48.2 billion US dollar, which is lowest level since October. Durable goods order also expanded 1.8% in month of February versus the 1.7% expected and as compared to 2.3% in January.

Investors continues to invest in Japanese Yen in today’s trading after the North Korea tested a ballistic missile ahead of the meeting between Chinese president Xi Jinping and U.S president Donald Trump.

Uncertainity grew in Asia after the launch of medium range ballistic missile by North Korea off the east coast of the Korean Peninsula earlier today. After the launch U.S secretary of state Rex Tillerson said in response of the missile launch that United States has already spoken enough about North Korea and refused to give further comment.

Investors are anticipating that this may be the sign that the U.S would intervene in North Korea in some manner, this pushed Japanese Yen higher. But it is very unlikely that the Yen would continue its strength in times of crisis in Asia. Further escalation of tension in Asia could force the investors to close their bets for higher yielding currencies financed in Yen.

Corporate hedging at the start of Japan’s new fiscal year is also. Large corporations may be selling the dollar as newest Bank of Japan survey shows the large corporations set their foreign exchange rate around the 108 level.

Euro recovered its losses slightly against other major currencies even as Europe’s political stability looks likely to be tested further in coming weeks. If political uncertainity continue to hurts the economic activity in Europe, European central bank could be forced to keep the accommodative policy in place for a longer period, which would have adverse effect on Euro.