It was a relatively quiet trading day into the weekend on Friday and promises more of the same today with little on the economic calendar to provide excitement. There was no fresh news on the Trade situation between the US and China, although we did see a widely expected loosening of China’s internal policy on bank reserves which should add $100 bio to the economy. In Turkey, we saw the expected victory for President Erdogan with the Lira gaining ground on confirmation of the result which has not unexpectedly been contested by opponents claiming fraud through the process – expect further volatility for the currency.
The stock markets finished the day back in the black and we’re set for a muted yet positive start to the day in Asia. OPEC confirmed an increase in production of close to 1 mio barrels a day which allowed Oil to have a bit of a relief rally with most of the market having already priced in close to that amount – we saw a bit of a rally across the commodity currencies on that back of this move.
Looking at the week ahead and despite a quiet couple of days, expect the focus of the market to remain on the Trade situation between the US and China and indeed on other parts of the world, with most recipients of proposed tariffs promising to fight fire with fire. It does appear that we are looking for the US to take the initiative in pulling back on some of it’s hard line proposals and until we see this then we will see further opportunity for downside risk trades. We do see some important tier 1 data later in the week and also some central bank action with the RBNZ on Thursday, but the market expects most trading opportunities will come from the news wires and will be positioning itself accordingly.