Asia equities followed Wall Street’s lead and closed in the red as oil weakness dampened sentiment. The Nikkei 225 lost 1.42%, ASX 200 shed 0.79 % while Shanghai Comp ended up 0.1% after PBOC announcement to conduct open market operations on a daily bases created uncertainty as market decide on how to decipher the news. China seems determined to stabilize prices and will be relentless in doing so, we expect the Chinese markets to find support while this new liquidity is assimilated. However, if China is too aggressive for to long, markets will lose faith in their ability and we would see the counter effect of what the PBOC is expecting.
Today sees data in the form of CPI m/m and Core CPI m/m, expected at -0.1% and 0.2% respectively. The Fed has announced numerus times that it will be vigilant of key data as they try to plot the future of their monetary policy. These figures fall under that spectrum, and better than expected numbers will fuel bullish sentiment which will lift the USD against the board, while leading to a fall in commodities and possibly equities if the prospects of rat hikes outweigh the benefit to the asset class.
Political factors keep the future of the GBP in limbo as UK Prime minister flirts with BREXIT, with talks between the UK and the EU failing to yield an outcome. News regarding the meeting and thus volatility can be expected throughout the day. News out of the UK today comes in the form of Retail Sales m/m expected at 0.8% and Public Sector Net borrowing, expected at -13.8B. Better than expect numbers will see the GBP look for further upside.
CAD bulls will be hoping todays data is enough to keep the CAD bid as they enjoy the recent respite in the ever weakening loonie. The USDCAD is flirting with the daily 100 EMA and positive data today could see the support broken and USDCAD bears trying for 1.3000. The data due today is as follows:
- Core CPI m/m expected at 0.2%
- Core Retail Sales m/m expected -0.5%
- CPI m/m expected 0.0%
- Retail Sales m/m expected at -0.7%