Weekly Market Recap
Week in review
- 30/05 – U.S. – Pending Home Sales
- 31/05 – JP – Unemployment Rate, Industrial Production, Retail Sales
- 31/05 – U.S. – PCE Inflation
Thought of the week
The spotlight is back on the Chinese renminbi (RMB) as trade tensions between the U.S. and China re-escalated. From its recent peak on April 17th, the RMB fell by over 3.4% against the U.S. dollar, back above the 6.9 range we saw in late 2018. We believe the renewed trade tensions will continue to put pressure on the RMB in the near term. However, stronger than expected RMB fixing by the People’s Bank of China shows Chinese policy makers’ efforts to maintain stability in its financial markets. Furthermore, several factors still weigh on the U.S. dollar in the medium term: 1) It is overvalued; 2) U.S. trade and fiscal deficits continue to rise; and 3) A dovish U.S. Federal Reserve. As U.S.-China trade tension is likely to remain a source of both market and exchange rate volatility in months ahead, investors should further diversify their holdings across asset classes, weathering through volatility with income strategies and protecting your portfolio with more defensive securities.
Chart of the week