The markets rallied across the globe yesterday as a much more conciliatory tone came through from both sides of the recent trade turmoil situation. President Xi Jinping’s speech in Boao eased recent tension initially in the Asian session, sending equities higher, this move then got a second wind as President Trump extended his thanks for some of the comments. There were no specific details in the speech which will leave some market participants wary, but in general the market was happy to jump on the back of the change in tone. Risk appetite trades gained across all the financial products with the commodity currencies gaining good ground in particular and the major currencies coming back better bid. Jpy pulled back across the board with the crosses notably gaining good ground.
The market will need further reassurance from as we move ahead to sustain this move back to the topside and it will still remain vulnerable to any hardening of position from either side.
Looking ahead to today’s trading and there’s a chance today of the market focus turning back to the underlying fundamentals with a good range of data releases coming our across the sessions. In the Asian session we have China’s PPI and CPI releases due and then the focus will turn to the Aussie with the RBA Governor due to speak later in the day. Into the London session and market focus will move first to the sterling as Manufacturing data is due and then onto the Euro as EU President Draghi is due to speak. Into the New York session and main event of the week is the US CPI data with market expectation sitting at 0.0% change for the MoM number and 2.4% for the YoY.