Weekly Market Recap

Asia Pacific

27/05/2019

Week in review

Week ahead

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

Source: Factset, J.P. Morgan Asset Management.

All returns in local currency unless stated otherwise.
*Currencies’ return are based on foreign currencies per U.S. dollar. An appreciation of the foreign currency against the U.S. dollar would be positive and a depreciation of the foreign currency against the U.S. dollar would be negative.

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