We had a bit of a mixed day across the markets yesterday, with little in the way of fundamental data releases, investors watched the news wires closely for the next move in the trade situation between the US and China. We didn’t get any significant changes from either side and the focus now turns to the Boao forum later today where President Xi is due to speak. Debate is rife throughout the market on the next moves from both sides but the general consensus is that any further escalation of the situation will have a negative effect on global growth. China certainly has plenty of ammo on its side including its holdings of US debt and its ability to devalue its currency. Any mention of these today should see downside pressure on the global stock markets and risk trades.
Elsewhere in the markets, Russian assets took a big hit as US sanctions started to bite, the ruble dropped over 4%, the RTSI finished down 11.4% and Aluminium gained 5% as Rusal (MCX:RUAL) shares crashed 50%. Traders will continue to monitor this section of the market closely as today’s trading progresses but many feel that this volatility could spread with the expectation of Russian retaliation.
Across the currencies, the majors remained trading in range bound conditions as they look for fresh news on the trade situation and further underlying fundamental data to initiate new moves.
Looking ahead to today’s trading and it’s relatively quiet on the data release front again, here in Australia we have NAB Business Confidence numbers due for release this morning and it’s quiet again through the London session. Into the New York session, we have the first tier 1 data out of the US this week in the form of the PPI numbers with expectation for a 0.1% increase in the m/m number and 0.2% in the Core data.
Once again the focus for the market will remain on the news wires and it will react swiftly to any changes in the various ongoing geo-political issues, including the FBI’s raid on President Trump's lawyer's office.