US stock markets finished the day yet again in the red as trade concerns continue to dominate sentiment. The dollar dropped across the board against the majors and there were no surprises when the UsdCny dropped off strongly after hitting the 6.7000 level, this move boosted by PBOC officials claiming that the currency would not be used as a weapon in the China-US trade dispute. Oil remained bid despite a brief downturn after Saudi Arabia confirmed that it would increase production and Gold saw it’s first decent rally for weeks as it bounced off of levels sub 1240.00 to finish the day around 1253.00.
Overall it was a relatively steady days trading yesterday with investors aware that liquidity would start to thin as we moved towards the US holiday today. It feels like all sides are jostling for position ahead of the US implementation of $34 bio worth of tariffs on China on Friday with some give and some take in the news. Investors are certainly wary that this could provide the impetus to push us into a full out global trade war and will be preparing for that eventuality as well as a more agreeable outcome which could lead to support for global growth.
Looking ahead to today’s trading. First up in Asia, we have tier 1 data out in Australia in the form of Retail Sales numbers and Trade Balance data, this is followed swiftly by the latest Caixin Services PMI print from China. Into the London session and we have a raft Services PMI numbers in Europe as well as the key UK numbers, with the US out on holiday, expect liquidity to thin as we move into the New York session. With holiday conditions later in the day, expect range bound trading, however, also be aware that any fresh strong news on the trade situation or other Geo Political issue could see exacerbated moves.