Global financial markets experienced a relatively quiet start to the week yesterday as they await key data and central bank meetings in the coming days. Stock markets remained bid across the globe but there was little in the way of attention grabbing moves, the European bourses all finished in the black after dipping earlier in the session and US indices remained at highs. The dollar continued to drift lower off of recent highs with the Dxy now trading back under 98.00. Oil remained volatile as the market continues to assess the impact of sanctions, WTI trading at $63.5/b and Brent at $72/b and Gold pulled back off Fridays rally to trade back around 1280.
Liquidity is set to remain an issue in the next couple of days with Japan off for the entire week and May Day holidays closing most European markets tomorrow. However some key risk events are due as we progress through the week and we could see some exacerbated moves in holiday thinned conditions. Tomorrow is when the market will be at its most vulnerable to liquidity issues with both Japan and China on holiday in Asia and European trading desks thinly manned, there’s not much on the calendar through the first two sessions of the day but the US session see’s the latest Fed rate announcement and statement and anything fresh from the Fed could see some strong moves across products. An even more dovish Fed will push the dollar lower in the short term and give further impetus for topside gains in the stock markets, however anything pushing to a more neutral stance should see a significant correction of recent moves.
Chinese PMI numbers are due out today in the Asian session and these are expected to remain north of the 50 level as domestic stimulus continues to buoy the Chinese economy, however anything well outside expectation especially with Chinese data will see some significant moves. Kiwi traders will be watching the NZ Business Confidence data closely which is due out at the same time. In the London session there is a whole raft of second tier data due but expect more range bound conditions as traders look to tomorrows holiday. Focus will move to Canada on the US open with the latest GDP numbers due out as well as comments from BOC Governor Poloz later in the day as he testifies before the governments finance committee in Ottawa. US Consumer Confidence data is also due out later in the day with the market looking for a 126.2 print and investors will be monitoring more updates from corporate America as earnings season rolls on.