We saw a continuation of the relief rally for the markets through the end of last week with the stock markets remaining bid and risk trades performing well. This pattern looks set to continue into the start of trading today in Asia with the now usual caveat of ‘without any fresh news on trade tensions’. There’s plenty of risk events coming up this week and this should add further volatility to the markets with the main themes all still in place. The pound had it’s usual roller coaster ride last week as Brexit talk dominated. Stronger hopes of a softer Brexit saw it rebound well in Fridays trading having taken a hit on President Trumps comments that better trade links for the UK to Europe could affect the relationship with the US.
There’s the potential for more volatility to come on the back of comments or tweets from the President this week with him due to meet Russian President Putin later today. Investors will be braced for moves either side, his now legendary negotiating tactics seemed to be well in force in the UK over the last few days as he first swayed one way and then the other.
Investor focus will start this week on China with the release of the latest GDP data, it’s expected to show a slowing of 0.1% down to 6.7% and analysts will be asking how much of an effect the recent Trade tensions are having on the numbers and if this is the start of tariffs hitting the underlying fundamentals. Currency traders will also note that the UsdCny is back trading around the key 6.7000 level and will be wary of any PBoC activity in the market. It’s a quiet day in Europe but investor focus will switch the US as the New York session gets up and running with the latest Retail Sales data is released.