The financial markets had a relatively calm day yesterday ahead of today’s start of the G20 meeting in Buenos Aires. Equity markets had a mixed day across the globe with little in the way of large moves across the indices. The dollar remained off it’s recent highs, influenced by yesterday’s more dovish comments from Jerome Powell which were backed by minutes from the last FOMC meeting released this morning. The Fed indicating that they will be approaching 2019 with a more flexible approach than previously projected to the market and that ‘gradual rate hikes’ may not be the way forward anymore. The US 10 year yield pulled back further over the course of the trading day finishing up near it’s lowest level since September adding some weight to any rallies in the greenback.
There’s no doubt that events coming up over the next few days at the G20 have the potential to move markets considerably and it’s been touted as a major risk event since we pushed through the US midterm elections earlier in the month . The meeting between Trump and Xi will be the main market focus and there has been much debate already as to whether we will see some sort of truce in the current trade war or whether in fact we’ll see a hardening of resolve on the situation. One thing is certain and that is that we will see more volatility across financial markets as sentiment sways with progress, or the lack of it. There are also plenty of side shows to the main event and experienced market players will be paying as much attention to them as to the headline news. With so many world leaders meeting at a time when the overall global trade framework is changing there could be more opportunity for traders in the peripheral dealings. Oil will be a major point of discussion for many attending as will a plethora of potential bi-partisan deals and these could have the ability to move individual markets more than the overall sentiment that will be influenced by the US – China situation.
Today’s market moves are likely to be dominated by the news wires and updates from Argentina, however these are expected to come later in the day so expect relatively quiet trading conditions for the early sessions. In Asia today we do have the latest Chinese Manufacturing and Non-Manufacturing data, these are followed by the Flash CPI numbers in Europe. The New York session kicks off with some key Canadian data in the form of the GDP and RMPI numbers but expect the impact to be relatively short liven as the market focus turns south and looks to developments and headlines from South America.