We had a positive day across financial markets yesterday, the global stock markets had a positive day in the main with earning results once again strong and risk on trades rallied across products. The dollar dropped against most of the majors as the positive sentiment flowed through to the currency markets. We saw a similar small retreat in EM’s although the same can’t be said of the Turkish Lira which took a significant hit when the central bank failed to hike rates against market expectation, raising more questions on the influence of President Erdogan on the central bank and the validity of his loose policy approach.
In the UK, Prime Minister Theresa May advised that she will be running the Brexit negotiations directly from her office, this step taken after the recent cabinet reshuffle and the pound rose as a result. Further positive, soft Brexit news should remain supportive for the pound and the market will remain focussed on this key issue as well as an anticipated rate hike in August.
In Asia today, the early focus will be on the Australian market with the latest CPI date due for release with market expectation sitting at 0.5% QoQ and 2.2% YoY. Once again, most participants don’t see this on having a big effect on the RBA’s current thinking, but a strong number today, backing up some other recent positive fundamental prints may bring rate hike expectation closer along the curve and provide support for the Aussie dollar.
It’s another quiet day through the other sessions in terms of fundamental date with the exception of the latest US Crude Oil inventories later in the day and so investors will maintain their focus on the newswires for any change in sentiment.