US stock markets fell approximately one per cent in the overnight session as traders fretted that the US and China would not complete a trade deal by March 1st. A potential US Government shutdown restarting on February 15th has gone quiet in the news of late, but has most certainly not gone away.
The news wasn’t particularly good out from Europe either. (I shall include the UK in this, for now) The Bank of England (BOE) lamented the “fog of Brexit” and its effects on future UK growth. Not to be outdone, the ECB downgraded growth across the euro-zone and Germany announced abysmal industrial production numbers.
Hong Kong returns from holiday today with the tone of Asian markets likely to be “cloudy” following the overnight sessions. We have a very light calendar globally with German exports expected to be watched closely for further signs of deterioration. Canada employment data will spark some short term volatility.
In Asia, the RBA Statement on Monetary Policy will be the regional highlight and will be dissected in detail following the RBA’s shift in stance on rates this week.
FX
The US dollar strengthened overnight, more due to the travails of its counterparts than a strong dollar story. EUR and GBP continued wilting as poor Eurozone data, and the Brexit impasse continued. This theme could extend to the Asia session.
The AUD and NZD consolidated after yesterday’s aggressive sell-offs. The technical picture looks grim for both with any recovery looking like a dead cat bounce.
Regional currencies could weaken today in the face of a generally stronger USD.
Stocks
Asian bourses will likely follow the lead of North America and fall gently today as the week comes to an end. The exception could be Australia which has enjoyed an excellent week, supported by higher iron ore prices, a dovish Reserve Bank of Australia and a weaker currency.
Gold
Gold prices rose four dollars overnight to 1,308, shrugging off a stronger dollar. US – China trade worries continue to see safe-haven buyers looking to pick up gold on price dips. Gold continues to consolidate above the 1,300 level.
Oil
Brent and West Texas Intermediate (WTI) fell 2.50% and 1.60% respectively overnight as the dollar strengthened and the weather improved in the U.S. A lack of news will likely mean listless trading in the Asian session, with oil move inversely to the dollar.
