Volatility continued across global markets yesterday as Trade Tariff talk by both China and the US increased pushing markets first one way and then the other. Confirmation from China of reciprocal tariffs hit global equities and risk trades as they came back at the US indicating that they will place tariffs on the crucial agriculture and aircraft industries. News later in the day that the US are prepared to sit down and try to achieve a negotiated solution led to a sharp rally back in the markets.
The ‘noise’ from the Trade turmoil continues to dominate market moves and we’re seeing plenty of volatility in the risk trades, however the major currencies have been relatively muted and remained range bound over the last week or so. This looks set to change as we move into the end of the week and the blue riband Non-Farm Payroll release from the US. Last night’s ADP Non-Farm data came out stronger than expected and market participants will be watching closely to see if stronger numbers on Friday both in the headline data and the Earnings numbers will push up Fed expectations of further rate hikes.
Looking ahead to today’s trading and all eyes will be on the news wires for anything fresh on the trade tariffs situation but once again we have some significant tier 1 data that will affect the underlying fundamentals. In Australia we have the latest Trade Balance data being released at 11.30 am, then into the London session we have a raft of Services PMI numbers coming out of Europe culminating in the UK number at 8.30 pm. In the New York session we have Trade numbers due out of Canada followed by the weekly Unemployment Claims from the US.