We had a fairly steady trading day for financial markets yesterday as little fresh news on the geopolitical front and data results coming out close to expectation saw little in the way of volatility in most products. Earlier in the day the Chinese GDP data had come out slightly worse than expected and along with a weaker Industrial production print, that had seen some pressure on the yuan, EM’s and associated markets, however, the impact was not considerable. Despite a better than expected number in the US Retail Sales, the dollar drifted lower with treasuries although most markers remained in familiar ranges. The one exception being Oil which dropped $4 a barrel after Saudi Arabia offered to increase supply to Asia, there was little reaction from the Petro-currencies but a continued move should see more correlation.
President Trump’s meeting with Russian leader Vladimir Putin resulted in little volatility for the markets, although the President will be getting very uncomfortable as he tries to sit on the fence between Russian denials and what appears to be clear evidence from the US of Russian meddling in the US election. Criticism has been harsh on the President in recent weeks as he appears to want to antagonize long standing allies and placate a traditional adversary, if this pattern follows through into further trade issues then expect a stronger market reaction.
First up this morning, we’ve seen a weaker than expected print for Kiwi CPI numbers but apart from a 15 pip knee jerk reaction from the flightless bird, the markets are little changed. This could lead to some pressure over the session on the Kiwi especially on the crosses as the major pair will probably remain under greater influence from more international factors.
Looking ahead to the rest of the day and the main focus will come in the New York session as Fed Chair Jerome Powell testifies in front of the Senate Banking Committee for the first time with his Semi Annual Policy Report. Before we get to that we have the RBA’s Monetary Policy Meeting Minutes this morning here in Sydney, but once again little is expected from them. Later in the trading day the market focus will turn again to the UK with the Bank of England Governor Carney due to deliver his Financial Stability Report to the Treasury Select Committee just before the UK’s latest employment numbers – along with continued Brexit developments this could lead to a volatile day for the cable and sterling crosses.