We saw a steady day in the markets yesterday as both the US equities and the dollar continued to grind higher. The earnings season also carried on in the same vein with this time Berkshire Hathaway coming through with strong results adding further support to the US indices and treasuries. There was little in the way of fresh Geo-Political news, although the simmering trade situation between the US and China continued along its now usual path as China advised that it wouldn’t flinch in a Trade War in response to President Trumps weekend comments. We did see a strong move in the Turkish Lira as it took another significant hit on the back of increased tensions with the US, this occurring despite central bank efforts to curb the currencies decline by changing it’s reserve rules.
Looking ahead to today’s trading and the Asian equity markets look set to start in the black following the lead from their US counterparts. The markets focus will move to Australia this afternoon as we await the RBA’s latest rate announcement. Any excitement is likely to be short lives however as there is no chance of a rate move and investors hoping for a bit of volatility will be reliant on any changes in the statement. Analysts will be looking for any change in the growth forecast amid growing global tensions or on the inflation outlook, however once again it looks like any changes will probably be very subtle and unlikely to move markets far.
The RBA will be the main highlight of the day with the other sessions mainly providing second tier data at the best. Investors will revert to type and continue to monitor the news wires for their next trading opportunities with downside risks still very much front of mind. It still looks like EM’s will provide the swiftest moves in the current environment, but some of the major currencies are starting to look more vulnerable and we may not be far off breaking out of some of the long term ranges that we’ve been sat in for a while.