We are set to see equity markets open strongly in Asia this morning after the US and China came to an agreement which has essentially ‘put the Trade War on hold’ according to US Treasury Secretary Steven Mnuchin. The US has agreed to hold off putting tariffs on Chinese goods for now and China has agreed to buy significantly more goods from the US, which will of course assist in reducing the US’s trade deficit. Although this solution does appear to be a step in the right direction from the markets point of view, investors will need to see proof that the practical aspect of the agreement (i.e. Chinese purchasing of US good increasing) is working, before concerns about global growth recede significantly.
The markets had continued to trade in the same manner that we’d seen for most of the week through Friday’s trading sessions and once again dollar bulls would have been happy as the greenback finished the week on the front foot, with the Dollar index trading up at 93.70 on the close. Oil continued to trade strongly with Brent now up to $78.91/b and Gold had a bit of a relief rally after a tough week.
Looking ahead to this week and it’s relatively light on fundamental economic data and so once again Trade news and other Geo-Political issues should continue to dominate market sentiment and moves. We do have central bank meeting minute releases due and they will provide a strong focus later in the week, especially the Fed and ECB’s. In the UK we’re due to hear from BOE Governor Carney on a few occasions and we’re also due CPI, Inflation and GDP data, if we throw in the usual smattering of Brexit developments then the sterling probably has the strongest potential for volatility across the majors this week.