Global markets experienced a relief rally yesterday as fears over recent Geo-Political concerns retreated. Those concerns are still relevant in the market and will continue to factor in investors decisions, however we saw a decent rally in stocks and risk assets as yesterday’s trading sessions progressed. US stock markets finished the day nicely in the black with the Dow and S&P 500 both closing up just over 1.25%. In the FX space we saw big gains for the commodity currencies with AUD, NZD and CAD all having strong moves back to the topside, however there were slightly more muted ‘risk on’ moves in the CHF and JPY which indicates that there’s still a fair amount of apprehension out there with regard to the downside risks ahead.
Looking ahead to today’s trading and the Asian stock indices are set to start nicely in the black and we’d expect to see a continuation of this recovery throughout the session. Aussie traders will be watching the Private Cap Ex numbers this morning but aside from that release it’s relatively quiet on the data front. Investors will maintain their close watch on the newswires as Geo-Political issues continue to dominate market sentiment, however we’re fast approaching the crucial US employment numbers tomorrow and that will also factor into trading decisions.
Later today expect the focus to return to the situation in Italy on the open of the European session and while there seems to be a slim hope of a government being formed, the debate will continue on the likely outcome of fresh elections and the implications for the market of those results.
Into the US session and traders will be looking at the latest Canadian GDP release as well as the US Core PCE number and Personal spending data releases, but as with the other sessions, expect Trade and Geo-Political factors to dominate especially with the recent opaque and sometimes contradictory messages that we’re receiving from the administration.