Oil rallied strongly last night after the US called for allies to halt imports of Iranian Oil, this led to a rally in Energy companies and US indices finished the session in the black. The dollar appreciated across the majors with the UsdJpy in particular rallying well after a couple of pressured days. Investors are still looking for greater clarity from the White House with regard to it’s trade policy overall and more specifically the Presidents recent declaration on Chinese investment. Hopeful market bulls will be seeing a glimmering of light at the end of the tunnel after President Trump signalled he make take a less confrontational path than previously suggested and use the Committee on Foreign Investment to evaluate deals rather than impose a blanket ban. Whether this is just another route to the same outcome is still up for debate.
Despite a better day for financial markets the potential impact of the US’s protectionist trade policies are still very much at the forefront of investors minds and continue to limit any rallies we see. Canada advised yesterday that it is preparing to prevent an increase in Steel imports from countries looking to avoid the US tariffs and the EU is set to follow suit, this is just one of the knock on affects of the US policies and further implementation can only lead to lower global growth and increasing market pessimism.
Looking ahead to todays trading and it’s light on the ground in terms of economic data releases during the Asian session, once again the market will be looking at the BoE during the London session. Last night we heard a more dovish stance from soon to be MPC member Jonathan Haskel which led to a sterling sell off, however tonight we’re due to hear from the top man Governor Carney as he holds a press conference on the latest stability report – expect further volatility for the pound. Later in the day we have the release of the US Durable Goods numbers but once again and at the risk of sounding like a very broken record, expect any news on the Trade situation to dominate market sentiment and moves!