Global markets experienced another relatively quiet day yesterday with little in the way of fresh news to spur them on. President Trump’s State of the Union speech got a very subdued reaction from the markets with no comments forthcoming to alleviate concerns on trade or another possible government shut down. Stock markets had a mixed day across the globe, momentum from a positive start in the Asian session was not maintained with European bourses mixed and the US indices all finishing the day in the red. The dollar continued to drive higher with the Dxy now sitting above 96.40, this move assisted by sharp moves down in the antipodean currencies. The Aussie taking a big hit yesterday with RBA Governor Lowe turning more dovish in a speech in Sydney just a day after a relatively upbeat RBA meeting and the Kiwi dropping this morning on worse than expected employment data, the unemployment rate jumping 0.2% in the last quarter.
Investors are continuing to look for clarity on the trade situation between the US and China and as the trading days drift by with no concrete update on progress then markets become more and more concerned. The Chinese are on holiday for the Lunar New Year this week and we’ve heard little from that side of the discussion, traders will be hoping for some positive details when the two sides meet up again in Beijing next week. Probably more pressing for the US markets is the threat of another government shutdown, with both sides of the house standing firm on the contentious border wall issue at present and the deadline approaching swiftly on Feb 15, we could be back where we were just a few weeks ago.
Looking ahead to the rest of todays trading and once again it’s quiet in terms of economic data releases throughout the sessions, however there are a couple of key risk events. First up, Fed Chair Jerome Powell is set to speak in Washington during the Asian session today and investors will be watching closely for any updates on his views. Later in the day the market focus will move firmly to London and the latest Bank Of England Official Bank Rate decision and Policy summary. With Brexit the main concern for UK markets and therefore the MPC, there is no change expected but expect volatility to come from any new information disclosed in the Monetary Policy Summary or the Inflation Report.