Global trade concerns continue to weigh on the financial markets and news over the weekend gave little in the way of respite for investors hoping for a change of sentiment. President Trump looks set to plough ahead with plans to implement a further $200 bio of tariffs on China and he does not seem unhappy with signing a new Nafta agreement without the participation of Canada. It was a weak day on Friday for the worlds stock markets although the US indices are still trading at record highs, risk trades across the other products and particularly the currencies took another step lower, with notably the Aussie Dollar opening the week below 72 cents for the first time since 2016.
It’s a big week for financial markets ahead, with holiday season officially over in the northern hemisphere (although the US and Canada have one last hurrah in the form of Labour Day today) and a plethora of tier 1 data due for release along with the RBA and BOC interest rate decision announcements. The latest Non-Farm Payrolls data on Friday will become a focus as we move through the week but investors will maintain a close eye on the news wires as sentiment is still dictating market direction on the whole.
It’s a huge week for Aussie dollar traders ahead, not only is the currency trading at its weakest level for two years against the greenback on the back of global trade concerns but there are three tier 1 data releases due as well as the RBA meeting. Domestic fundamental data has been relatively supportive for the Aussie over the last six months but if this pattern changes and we get the anticipated carbon copy RBA Rate Statement and Rate hold, then the route is open for the currency to be trading around 0.7000 by week end.
For today’s trading the main focus in Asian will be on the Australian Retail Sales numbers due out this morning with market expectation sitting at +0.3%. Later in the session BOJ Governor Kuroda is due to speak in Tokyo and Yen traders will be paying close attention to this. Into the London session and the latest Manufacturing PMI data is due out of the UK and this will be a focus although Brexit sentiment is still expected to dominate sterling flows. As advised earlier it’s a holiday in the US and Canada today so expect liquidity to thin out as we move through the end of the day.