Tuesday ended up as a ‘risk-on’ session, reversing earlier deteriorating sentiment after the German/EU ZEW Economic Sentiment Survey painted a downbeat outlook for the German/EU economy. Things later turned around sharply due to growing hopes of a positive outcome from the US/China trade talks, with Ministerial level negotiations due to resume on Thursday. Stocks remained firm (+0.2/+0.4%), while the US dollar index (DXY) was down around 0.5% as safe-haven demand recedes as long as the US/China trade talks continue to produce positive headlines. The dollar was affected by headlines that the US is demanding a stable Chinese Yuan as part of the current trade negotiations, and headed lower against all the majors with the exception of the Jpy, which also remains soft. The Aud$ and the Nzd$ both rallied sharply on the headlines, along with the metals (Gold +1%, Silver +1.5%). The Euro also rallied from its sub 1.13 lows, but remains within its range, while Cable had a strong run higher, tripping stop-losses above 1.3000, as hopes grow that the UK will be able to push through changes to the current Brexit agreement.
WTI had a choppy session, although it remains firm, but is running up against some stiff resistance which may take a while to overcome.
Wednesday will be fairly thin in terms of data although late in the day the Fed will release the FOMC Minutes which will be closely watched by traders to see how dovish the board have actually become and if/when the next rate hike might take place. Ahead of that, the day kicks off with the NZ Q4 PPI (exp 0.6%qq, 1.1%yy) and the Australian Leading Economic Index and Wage Price Index (exp 0.6%qq, 2.3%yy). The EU sees just the German PPI (exp -0.1%mm, +2.2%yy) and EU Preliminary Consumer Confidence (exp -8.0) and all will really be on hold until the Fed or any US/China related headlines..
Economic data highlights will include:
Wed: NZ Q4 PPI, Japan Merchandise Trade Balance, Australian WBC Leading Economic Index, Wage Price Index, German PPI, EU Preliminary Consumer Confidence, US FOMC Minutes
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