The US stock markets bounced back strongly yesterday as fears of a trade war between the US and China receded with key players advising that market that talks are already in progress to come to a more amicable agreement. The S&P posted it’s best day since 2015 and the Dow and Nasdaq also had strong moves – The Dow having it’s best one day move in a decade . This translated through to the risk appetite in the currencies with the Jpy sold hard across the board and the dollar remaining under pressure as the rest of the majors continued to appreciate.
Also adding to a bit of pressure on the greenback was the latest round of Fed speakers, their rhetoric has taken on a slightly less Hawkish tone since last weeks FOMC. This was further reinforced last night as Cleveland Fed President Loretta Mester, normally a strong Hawk, reduced her estimate for the sustainable level of employment suggesting less urgency in the pace of further rate hikes.
Looking ahead to today’s trading sessions and it’s another quiet day ahead for data releases so once again traders will be keeping their eyes firmly on the news wires and general risk sentiment. The next couple of days should see some additional end of month and end of quarter flows added to the market and liquidity could become a bit of an issues as we approach the Easter weekend and market participants head for a long weekend.