Asian markets are set to open firmly in the black as the US indices continued to drive to the topside and make new highs once again. The S&P is now threatening 2900 and Nasdaq has topped 8000 as positive sentiment continues to push markets higher. The move in the US session was helped along with news that the US and Mexico are ready to sign a trade deal at long last. President Trump has advised that the deal could replace Nafta, but the Mexican side are keen to ensure that Canada are part of the process and the Canadian foreign minister will head to Washington today to negotiate their side. The dollar retreated further across the board as market optimism grew and flow came back to risk positive currencies and the benchmark US 10 Year treasuries dropped off as well.
One caveat for the market optimism could be the latest news from the President on the Chinese Trade negotiations where he advised that it’s not the right time for China and the US to be talking at the moment despite the recent visit of a Chinese delegation to the US. Investors will be keeping a close eye on the Yuan which has seen good appreciation in the last couple of days after PBoC action, but could see further downside if tensions once again increase.
In Australia, the political merry go round doesn’t seem to have quite finished as we approach the end of Malcolm Turnbull’s time in public office. News that Julia Bishop will hold a press conference this morning is hitting the news wires and the possibility that she could also step down from her position could bring further uncertainty to the political spectrum. If she did, this would put two constituencies up for by-election and the outside possibility that Labour could take a lead and force any early general election. It would be a perfect storm for Labour, but the uncertainty from the event could lead to downside risk for the economy and the Aussie dollar.
Looking ahead to the rest of the day and it’s another quiet one in terms of economic data releases, the UK is back in today which should spur some more liquidity later in the day, but once again sentiment looks set to dictate market direction.