The stock markets once again had a tough day as global growth concerns continue to plague investor sentiment. The US indices all finished the day in the red with tech stocks leading with way again, the Nasdaq closing 0.9% down. Some of the pressure to the US markets comes from traders anticipating more relatively hawkish comments from the Fed Chair Jay Powell when he speaks later today. US CPI data came out largely in line with market expectations and analyst feel this will do little to divert the FOMC from its current path. Sterling saw some really wild swings in the recent ranges as Brexit comments dominated traders attention with Cable see-sawing a big figure more than four times during the day. It’s finished up on a positive note with PM May appearing to have the cabinet behind her on her Brexit proposal. Oil managed to have it’s first positive day in twelve after reports of proposed production cuts hit the market although it is still trading close to recent lows at $56/b.
Yesterday’s price action in the sterling was a great microcosm of the swings that we’ve seen in the currency on the back of the UK leaving the EU. Brexit flow has dominated the level of the pound since the referendum and if the last few session’s volatility is anything to go by there will be more violent currency moves before it comes to a conclusion. As we approach various deadlines for an agreement the propensity for greater moves seems to increase, currently it’s looking more likely that a deal will come about and sterling is set to rally strongly if this does occur, but the PM has only really just got over the first hurdle and there’s a few more to go, first up, getting it through parliament.
Looking ahead to todays trading and the big focus in the Asian session will be comments from the Fed Chair when he speaks at the Federal Reserve Bank of Dallas. Investor focus will swiftly move over to Australia with the release of the latest employment data, market expectation is for and increase of 20k in the last month with the unemployment rate creeping higher to 5.1%. Into the London session and we have Retail Sales numbers due out of the UK but once again expect any market effect to be completely overshadowed by Brexit updates. During the New York time zone we have the US retail Sales numbers due out with expectations for an increase of 0.6% m/m pricing into the market.