Volatility continues to return to financial markets with more news out of the US causing moves either side in the last few sessions. We’d originally seen the ‘risk on’ trades come back well during the later part of yesterday’s trading as fears continued to subside with regard to the proposed US tariffs, however, just as we moved into the Asian session news came through from the US that the President’s top Economic adviser Gary Cohn has resigned and this has hit the market hard. He was seen as a calming, steadying influence on the administration’s economic plans and investors will fear that with him out of the picture it opens the way for these tariffs to be pushed through in the short term and possibly more protectionist policies to follow in the medium term. The ASX has now opened and it already 0.7% down, having been priced in to open slightly in the black. In the currencies, the UsdJpy and Jpy crosses have taken the brunt of the initial reaction and traders will be expected to continue to look for levels to sell as this uncertainty and negative risk sentiment continues.
Looking ahead to the rest of the session and once again we have tier 1 Aussie data due this morning in the form of the GDP numbers, market expectation is at 0.05% QoQ and 2.5% YoY. Into the London session and it’s pretty quiet once again but things will get more interesting as we move into New York open. We have ADP Non Farm data to kick things off with market expectation at 194k, but then the focus moves firmly north of the border to Canada with the Trade Balance data out before we have the latest from the Bank Of Canada, expectation is for the rate to remain at 1.25% but all eyes will be on the statement and any reference to recent developments in the trading relationship with the US. Expect volatility in the Loonie and Cad crosses.
It’s a big day for data as we’ve indicated above but once again the news wires could be the main source of market moving information.