Asian equities traded flat after Wall street failed to reignite itself with stocks closing in the red for a third day. The ASX 200 and Nikkei 225 both managed a small bump higher of 0.1%, while China’s Hang Seng gained 0.1% and Shanghai Comp. lost 0.7%.
In Fx, both the GBP and EUR found support after a positive meeting in Brussels where Terresa May unveiled a proposal for EU citizens that would allow for 3 million EU citizens to stay in the EU, a much less stringent approach than markets expected. However, the currencies weren’t allowed to fly too high as Angela Merkal, the German Chancellor stated that though this was a good start, there are still many key issues to discuss. Her concerns were echoed by the Austrian Chancellor, who stated that a long list of concerns regarding citizen rights remain. Going forward, markets will remain sensitive to news flows regarding the Brexit negotiations, with positive news leading to an increase in the value of the pound and the EUR.
Commodities traded flat for most of the day as a lack of data and a subdued USD gave little opportunity for directional trade. Gold oscillated around the 1250 mark with neither side able to dominate, while Crude oil played between 42 and 43 USD for the day. Any data weakening the USD will see gold and crude move higher, while a stronger USD will spur a weakening of gold below 1250 and crude below 42.
Today’s key data to look out for comes in the form of the Flash Manufacturing and Service PMI out of France, Germany and the EU. Better than expected data will see the EUR strengthen and vice versa should the data disappoint.
Out of Canada, we are expecting the CPI y/y which will indicate whether the Canadian economy is heating up or not. A higher than expected release will see the CAD strengthen while a worse than expect release will see the CAD weaken.
A speech by FOMC member Powell, will put the cherry on top for the weak, and if he strikes a hawkish tone the USD will look to squeeze higher into the weekend, while a dovish speech will see the USD retreat as the weekend approaches.