Trade tensions between the US and China, never far from the markets mind at the moment, came back to the forefront yesterday as the US started to increase pressure on China to come back to the negotiating table. Asian markets were set to start on the front foot as strong earnings from Apple and news that China and the US were about to announce fresh trade talks buoyed risk sentiment. However, the latest news out of the US is the Trump administration will propose raising it’s tariff percentage to 25% from it’s previous 10%. The jury is out on whether this is yet another ‘clever’ negotiating tactic by the US but the market has reacted as expected and risk appetite looks set once again to pull back over the next couple of trading sessions.
Prior to this, the main talking point for the market had been the result of the BoJ’s latest meeting, we saw plenty of volatility across the Jpy and Japanese bonds but while we did get confirmation of ‘policy tweaking’ it was probably not as much as prior market moves had indicated and we saw a bit of a pull back.
It’s non stop this week and the risk events continue to come thick and fast today, we’ve already seen the employment data out of NZ today with a better than expected employment change counteracted by a slight increase in the unemployment rate. We have nothing else due out in the Asian session but things will get busy once London opens with a raft of Manufacturing PMI data due culminating in the UK number. This is followed up by the ADP Non-Farm number and the ISM Manufacturing PMI data from the US and that’s before we even get to the small matter of the latest FOMC announcement.