Global stock markets continued to drive higher over the course of yesterday’s trading day as optimism increased that the US and China are getting closer to a trade deal and PMI data from both China and Europe surprised to the topside. Asian and European markets had strong days across their bourses but momentum did fade toward the end of the day as the US session finished with lower gains. The dollar dropped lower, Dxy trading back down to 97.00 and the pound firmed after yet another vote in parliament on Brexit, this time on the ‘no deal exit’ which was rejected by just one vote. Oil dropped off its highs but remains bid, WTI at $62.40/b this morning and Brent just over $69/b and Gold fluctuated in a relatively tight range but remains above 1290 for now.
The Aussie had a strong day yesterday after Retail Sales numbers and Trade Balance data came out much better than expected and help propel the struggling currency off of recent lows. Increased risk sentiment and buoyant equity markets helped maintain the bid tone throughout the rest of the sessions. It’s gained back it’s losses from the RBA meeting earlier in the week but traders will now be looking to the international environment for the next direction, the current optimistic outlook on global growth should be supportive of the Aussie however any sharp downward turn could see it back at yesterday’s lows and looking to test 70 cents in short order.
The latest negotiations in Washington between US and Chinese officials will continue to grab headlines as we move towards the weekend, hopes that a trade deal can be signed in the near future are increasing and investors are turning more optimistic on the back of it. This however may just be another step in the process as the implementation of any deal will most probably provide obstacles in the process and may weigh on sentiment further down the track, for the moment, investors are happy to see movement in the right direction.
Looking ahead to today’s trading and there is a very subdued economic calendar ahead of us, so traders are expecting more rangebound conditions. Asia is bereft of tier 1 data and will be looking to sentiment drivers for any fresh direction but ECB Monetary Policy Meeting Accounts should give traders something to look at in the European session. It’s a quiet data day today in the US ahead of tomorrows Non-Farm Payrolls although the Ivey PMI numbers out in Canada may provide some volatility in the Loonie.