We’ve seen a bit of calm come to the market towards the end of the US session after a tough day across the globe for equities and risk assets. There has been no let up in the apparent determination of either the US or China in the recent trade turmoil and markets are preparing for further downside while hoping that the latest salvos from the Trump administration prove to be another ‘negotiating’ tactic. The jury is out at the moment on the next move in sentiment and that’s reflected well in the current market levels.
The Asian equity markets are set to open on the front foot after a tough start to the week but investors will once again be very wary of any further escalation in the pending trade war between the US and China, and will be looking to position themselves accordingly. In line with the equities, we’ve seen a bit of a recovery in the risk currencies with the JPY crosses and Aussie seeing a decent bounce, however, the trend looks to be firmly to the downside in the current environment and traders may be using any rally to establish fresh shorts.
Looking ahead to today’s trading day and the global trade situation is set once again to dominate sentiment and any fresh moves. There is little in the way of tier 1 fundamental data on the calendar but we do hear from the major central bank heads as they participate in a panel discussion at the ECB forum in Portugal. Also, we have the latest Oil Inventory data due out of the US and expect focus to start to move north from Portugal’s to Austria where OPEC are set to meet. There’s some firm debates already set up for the oil cartel and expect some volatility in the Black Gold and its associated Petro currencies ahead.