The market continues to push any further global trade concerns to the side and has spent the last few sessions since the latest tariff and counter-tariff announcements pushing higher. Global stock markets again strode forward with most of the worlds indices having strong days, the Dow now heading back towards it’s late January historic top and the Nasdaq looking to get back towards it’s recent highs. The dollar remained steady once again as risk currencies continued their grind back topside as fear subsides.
These moves were all helped along by news out of China that they had no plans to weaponise the currency in the growing trade conflict with the US. Currency traders have been watching currency closely as it has depreciated significantly since the start of this trade issue between the two nations and there’s no doubt that this has helped to soften the blow of tariffs. So these comments should come as some reassurance for UsdCny bears, however we are still within striking distance of the key 6.9000 level and stranger things have happened in the past than for that key levels to break after official ‘jawboning’ on the subject.
It was a relatively quiet day across the currency markets with positive tones helping those currencies that had been looking vulnerable managing to gain more respite and move to slightly more comfortable levels. In particular several EM currencies have gained some traction as have the major commodity currencies with the Aussie and Kiwi in particular moving back well from recent lows against the dollar and on the crosses. The jury is still out on how they will all travel in the next few months and it still feels as if their future level is in the hands of decision makers in Washington and Beijing rather than within their own borders.
This morning we saw a stronger print in New Zealand in the GDP numbers which helped accelerate the move topside for the ‘flightless bird’, it jumped a swift 50 pips against the greenback and more so on the crosses and should keep the bid tone for the next few sessions.
Looking into the rest of today’s trading and it’s relatively quiet for the remainder of the Asian session, but things should start to look interesting as we move into the European open. We have the latest rate announcement from the SNB where once again they are expected to hold rates steady, so, as is the case for many central banks at the moment, the focus will be on the statement and consequent message to the market. This is followed by UK retail sales data with market expectation for a drop of 0.2% month on month.
The highlight of the New York trading session data wise will probably be the Philly Fed Manufacturing Index, but as with the other sessions, investors will still maintain a strong focus on the news wires and any change in sentiment that comes from new input to global trade concerns.