The stock markets failed to gain much traction in yesterdays trading sessions as global growth concerns continued to plague market sentiment. We did see a bit of respite for beleaguered tech stocks in the US session as the Nasdaq managed to finish the day in the black having dropped nearly 4% over the last few sessions, this helped as US interest rates had a bit of a breather. However, an overall cautious sentiment across most financial products left us trading close to recent range extremes with the market on the lookout for the next catalyst. The latest report from the IMF backed up recent market moves as it cut its global growth predictions with the obvious US-China trade situation cited as one of the reasons for this revaluation.
Currencies had a relatively stable day with the dollar losing some of its recent gains against the majors and EM’s although not by any significant margin and many still look poised for further depreciation. Investors will continue to focus on the UsdCny as we move through the week and the market now seems happy with it trading north of the previous line in the sand at 6.9000, however interest will increase if it starts to move quickly towards danger levels up near 7.000. The Aussie also caught a break and managed a 50 pip rally of it’s recent lows but it’s short term prospects are likely to be tied to the Cny and overall global sentiment rather than domestic factors and traders are preparing to be trading on a 6 handle in the near future.
Sterling got a bit of a shot in the arm last night as EU Brexit negotiators advised that a deal could be concluded as early as Monday, with Cable jumping nearly a big figure and EurGbp dropping 50 pips. There is probably more political wrangling ahead for this deal but the tone certainly seems to have changed to a more positive outlook recently and any deal in the next few week should lead to further sterling strength.
Looking ahead to todays trading and once again global sentiment is set to dominate market flows. There are no tier 1 economic data releases due in the Asian time zone but the UK and Sterling will come into focus again as we enter the European session with GDP and Manufacturing Production data due out. Into the US session and US PPI numbers are due out which should provide the main fundamental focus for the day with market expectation for a 0.2% increase.