The markets shrugged of yesterday’s excitement of the historic US – North Korean summit in Singapore swiftly as it moved its focus back to economic fundamentals. Equities had a mixed day and the dollar continued to grind higher after the US CPI data came out on expectation. Sterling had a volatile day as Brexit faced another test in the UK where PM Theresa May won a key vote in parliament and employment data came out close to expectation. There’s still a large amount of uncertainty around the whole Brexit issue which will continue to keep sterling traders on their toes. Recent data plus doubts over BoE policy will continue to pressure the pound.
It does feel like the market is keen to keep the ‘noise’ of geopolitical factors to a minimum this week and focus is squarely on the plethora of fundamental data and central bank meetings which should give it true direction in the medium to long term.
Looking ahead to today’s trading and the focus will be on the Fed’s expected rate hike close to the end of the day and probably more importantly the message passed across from the statement and press conference. We expect markets to be less volatile up to that point although Aussie traders will be interested to see what RBA Governor Lowe has to say around lunchtime in Melbourne today and we have key CPI numbers out of the UK early in the London session.
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