Global equity markets had a relatively quiet day yesterday after a strong start to the week as investors wait for the next catalyst to impact some momentum. US indices finished the day very mixed with the Nasdaq up 0.25%, the S&P flat and the Dow down 0.3% and Asian markets look set for a muted start to their day. The dollar dropped off later in the day but still remains relatively well bid against the majors with the Dxy trading around 97.30. Once again the pound was the main mover as Brexit developments kept up the pressure on sterling traders, it’s back up near 1.3150 this morning as Theresa May looks to her opposition again to work out a cross party plan for a softer exit. Oil did maintain it topside momentum as output cuts continued from major producers, WTI now around $62.50/b and Brent over $69/b and Gold bounced back above the 1290 level again.
Yesterday’s RBA meeting gave the doves and Aussie bears a bit more ammunition as they pulled the holding stance on monetary policy out of their statement. The market see’s this as a green light that the next move will indeed be a cut from the bank and reacted accordingly, the Aussie is now trading back down near 0.7050 this morning and could be set to challenge the key 70 cents mark later today if data disappoints. There was little reaction from the market on the back of the latest Australian budget last night as the government delivered a predictably generous budget and upbeat forecast with the next election measured in just weeks now. The election should have much more impact on the market and investors will be closely monitoring the polls over the next few weeks to see if the concessions delivered last night will swing things back in the governments favour.
Looking ahead to todays trading and the initial focus in Asian will be on the Australian Retail Sales and Trade Balance numbers due out this morning, they are followed by the Chinese Caixin Services PMI data later in the day. Services PMI numbers also dominate the economic calendar in Europe this later today but as is now the norm expect the next Brexit developments to have a significant affect on the markets there. Traders will be looking closely at the ADP Non-Farms on the New York open as the traditional front runner to Friday’s NFP’s and the ISM Non-Manufacturing PMI numbers are due later in the session.