We saw the markets recover on a number of fronts during yesterday’s trading as it digested the latest developments in the US – China trade negotiations and other Geo-Political influences. The equity indices finished the day strongly in the US with the Dow closing up 1.21% however, treasuries saw little change on the day. The dollar finished the day slightly lower with the commodity currencies leading the way against the greenback and on the crosses, Aussie and Cad were the stand outs with the AudUsd finishing the day up around 1.0%. and AudJpy and CadJpy having even stronger moves. The other majors didn’t fair as well as the Italian political situation continued to weigh on the Euro and further Brexit concerns kept sterling subdued.
It’s quiet start to the day in terms of fundamental data releases today so traders are preparing for further topside moves in the equities and risk currencies. The Aussie looks to have even further potential for gains as commodities recover from their recent moves down, particularly Iron Ore, and bond yield differentials recover to hit a short market. News out of China that they may be about to scrap the four-decade old limit on the number of children a family can have should also be supportive for the AsiaPac region.
Later in the day the focus will once again move to the UK with the Inflation Report Hearings due as well as further potential for Brexit headlines hitting the news wires and Euro traders will be conscious of any further developments in Italy with the situation still looking unstable. Into the New York session and it’s quiet on the data release front but investors will be closely following the news wires for the next updates on the various Trade situations between the US and other countries with China and Nafta probably still at the top of the list.