Volatility came back hard into the markets yesterday with several factors combining to add significant moves across the products. Positive news about a deal between the UK and EU helped the sterling surge to the topside before the Euro also caught a bid tone on news that ECB officials are now shifting the focus of their discussions to potential rate movements. With both these major currencies moving quickly to the topside, the dollar index dropped off beneath 90.00 once again. Later in the session the stock markets were hit hard, especially tech stocks with news that Facebook was in trouble after a possible data leak (down 6.8%) and Apple was also under pressure as news of it’s efforts to develop it’s own display technology hit the news wires, plus reports that the EU is planning to impose a 3% tax on large digital companies operating within its market. Trade talk was still very much front of house at the G20 as well with most participants warning against protectionist policies.
Looking ahead to today’s trading and the focus of the Asian session will be on the Aussie as the RBA releases it’s Monetary Policy Meeting Minutes and RBA Assistant Governor Bullock speaking later on. The Aussie had managed to bounce from yesterday’s lows in line with the general dollar move but still looks vulnerable even with a good rally in Gold overnight. Iron Ore prices still at yearly lows and traders will be looking at the meeting minutes to see if it mentions and how the RBA views the looming trade war between the US and China and its effect on the Australian economy. Traders will also be watching the stock market opens closely to see how much follow through we get in Asia after a poor day in the US
Into the London session and the market focus will switch over to the European currencies with Sterling back in focus as the CPI numbers are released just ahead of Thursday’s BOE meeting. The New York session is quiet in terms of fundamental data releases but promises to be anything but after recent moves in the market and an increasing focus on the FOMC on Wednesday.