The recent whippy moves in the market continued yesterday as we enter the Asian session with the US equities back in the black, mainly prompted by a rally in Amazon shares after the White House confirmed that there is no vendetta against the company despite recent presidential tweets. The Dow finished the session up 1.65% with the S&P and Nasdaq not too far behind, this should see the Asian stock markets opening on the front foot. This has translated across the rest of the financial market with a return to risk move once again, UsdJpy and the Jpy crosses have recovered the losses from the last few sessions and the see-sawing of sentiment looks set to continue.
The US has announced that it will begin imposing tariffs on 1,333 products from China within weeks and China has already responded saying that it has plans for reciprocal tariffs in place. Calm heads are hoping that more can be done at the negotiating table to prevent further escalation of what seems like the opening salvo’s of a Trade War that could have a huge ripple affect on global growth. China does seem the keener of the two to come to the table at the moment and many market participants are hoping that once again the US administration’s bark proves to be bigger than it’s bite and a smoother process will prevail. Investors will continue to monitor the situation closely as this sentiment is dominating the underlying fundamentals in the markets and causing much of the risk on/off volatility that we are seeing.
Looking ahead to today’s trading and apart from more volatility expected from the aforementioned situation we have several tier 1 data releases. First up in the Asian session we have the Retail Sales data due out in Australia with market expectation sitting at +0.3%. In the London session, sterling traders will focus on the Construction PMI data with a 50.9 print expected. The New York session should be interesting with first the ADP Non Farms data due, closely followed by the ISM Non-Manufacturing PMI data, both of which have the potential to move the greenback. We also have the US Crude Oil inventories due with a lower number of 1.4 mio barrels expected.