A bumper day on Wall Street saw equities rally aggressively as we saw the DJIA gain 1.55%, the S&P500 gain 1.31% and the NASDAQ 100 gain 1.32% on a return to a riskier appetite by traders who are buying into Trumps “good for business” slogan. Asian equities joined the party, with the main bourses closing in the green as we saw the Nikkei 225 buck a strengthening JPY to close 1.3% in the green while the Australian ASX 200 gained 1.2% and the Chinese Shanghai Composite managed a slight bump up to gain 0.1%.
In FX, we saw the USD remain stable to negative as the USD INDEX hugged the 100 level as we saw its counterparts put in sneaky gains against the relatively strong green back. The EURUSD moved closer to 1.0800, the AUDUSD tested 0.7500 and the NZDUSD reclaimed 0.7200.
Commodities saw crude oil continue to be squeezed lower despite a larger drawdown in US inventories, suggesting that oversupply fears may be creeping back in ahead of key economic data. Should upcoming data show a vast improvement in various economies, the assumed increase in demand should have the commodities back on the front foot but until then, we expect the squeeze to continue until key support at $50. Gold has remained slightly bid as we see some support at the 1170 level which will remain as long as no new news disturbs the equilibrium.
Today’s main economic event comes from the Euro Zone in which we see the European Central Bank (ECB) release its Minimum Bid Rate, expected unchanged at 0%, and ECB President Draghi takes the podium for the ECB press conference. With traders largely expecting the ECB to announce further easing to support the struggling European economy, which continued to be plagues by low growth and high unemployment amongst political turmoil in various partner nations, todays data will be of paramount importance. Should they decrease rates further or announce that more liquidity will be pumped into the EU, we would see the EUR fall as the inflationary affect, in which too many Euros are circulating, leads to a devaluation of the EUR. On the other hand, should the ECB stand strong and maintain its stance that its current operations are appropriate, we would see the EUR firm up as markets take the ECB`s lead, pricing in a recovering to stable Eurozone.