Global stock markets continued to drive higher during Friday’s trading as optimism increased on global trade issues with the US and China making progress during negotiations. The US indices finished the week well with the Nasdaq leading the way, up 0.91% on the day, the Dow and S&P not far behind at 0.7% and 0.64% increases respectively. The dollar dropped in line with treasury yields as risk currencies, particularly the commodity currencies rallied with investor sentiment. Oil maintained its recent gains as supply concerns over OPEC production cuts and the effects of sanctions to Iran and Venezuela continue to influence price, WTI still trading above $57/b and Brent over $67/b.
It looks set to be another interesting week ahead for financial markets with investors looking once again for further clarity on trade and geo-political issues. President Trump has this morning confirmed that the US will delay the tariff increase that had been planned for Friday and this should help the positive momentum for sentiment into the Asian session. The reaction has so far been relatively muted and investors will continue to look for further detail and developments on the negotiations as we move through the week. In the UK the Brexit deadline is fast approaching and a firm deal still looks far from completion with political machinations on both sides of the channel still slowing the process. Theresa May goes back to parliament this week to try to maintain control of the exit process and investors are bracing for more volatility in markets as the battle rages on, the Irish backstop still remains the key sticking point at the moment.
The Kiwi got a shot in the arm this morning as Retail Sales data came out much stronger than expected, 1.7% for the quarterly data against the expected 0.5%. The flightless bird sitting back up above 0.6850 having traded as low as 0.6758 on Friday and the cross once again challenging recent lows under 1.0400.
Looking ahead to the rest of the days trading and there is little else of interest due for release in the Asian session. In terms of actual data releases it’s a quiet day in London and New York however we do hear from some high level central banker today. Bank Of England Governor Mark Carney is set to speak early in the London session and sterling traders will be focussed on that as well as anything new on Brexit. In the US we are set to hear from Richard Clarida as he speaks in Dallas although it’s widely expected that he will reiterate comments from Friday where he maintained a relatively dovish outlook.