Global markets had another relatively subdued day as investors wait for clarity on a trade deal between the US and China and the latest US jobs numbers. Equity indices had little to show for the days trading although both the Dow and the S&P did manage to finish the later session nicely in the black, the dollar bounced back on the day with the Dxy springing off the 97.00 level to open in Asia around 97.30. The pound continued to swing in the Brexit wind and is back under 1.3100 this morning, traders will continue to monitor updates closely as both Tories and Labour put their heads together to come up with a new deal. Gold took a further dive but bounced strongly off of the long term support level around 1280 and opens the Asian session at 1292. Oil dropped off of daily highs as doubts crept through on the trade situation but still remains bid overall, Brent at $69.4/b and WTI $62/b.
The prospective trade deal between the US and China remains a major focus for the market and although investors remain cautiously optimistic there does seem to be an element of doubt creeping into many participants views. This was backed up overnight as both President Trump and Robert Lighthizer pushed back expectations of a quick deal signing, Trump advising that it could be a month away and Lighthizer reiterating that major issues still need to be resolved. Traders will now be questioning how much positive sentiment is priced into the market and this could lead to some sharp corrections, focus will of course move to the US again later today with the crucial job data due. Market expectation is for a bounce after last month’s disappointment with 177k new jobs, 0.3% increase in monthly earnings and unemployment remaining stable at 3.8%. Investors are preparing for rangebound trading conditions ahead of the data and are poised for extra volatility if we see any prints outside those expectations.
Looking ahead to the rest of the days trading sessions and it looks like being a quiet day ahead of that New York open with little due out on the economic calendars in Asia and Europe. China is on holiday today so expect that to add to the more subdued trading conditions in the Asian session but expect volatility to increase as the day progress and traders position themselves ahead of the major data release.