TALKING POINTS – YEN, US DOLLAR, CHINA, TRADE WAR, SHUTDOWN, ISM
Danger urge for food swells on China RRR minimize, US jobs information, dovish Fed-speak
Testy US-China talks might gasoline commerce struggle fears, bitter market temper anew
US authorities shutdown, tender companies ISM information amplify risk-off menace
A quiet providing on the financial information docket is more likely to put sentiment developments in focus for international change markets in European buying and selling hours. The temper is comparatively upbeat initially of the week, echoing Friday’s rosy session. Traders cheered as China minimize its banks’ reserve requirement ratio (RRR), December’s US jobs information dwarfed forecasts and feedback from Fed Chair Jerome Powell took a decidedly dovish flip.
Bellwether S&P 500 futures are pointing decidedly greater, hinting at extra of the identical forward. That appears to be most clearly unfavourable for the perennially anti-risk Japanese Yen, whereas the pro-cyclical Australian, Canadian and New Zealand rise alongside different so-called “dangerous” property. The markets’ disposition might but darken nonetheless as worries concerning the US/China commerce struggle re-emerge.
TESTY US, CHINA TRADE TALKS MAY SOUR MARKET MOOD
A delegation from Washington DC is in Beijing, hoping to construct on the ceasefire agreed by presidents Donald Trump and Xi Jinping on the G20 summit in Argentina and set up a basis for rapprochement. Which will show elusive nonetheless contemplating the group’s chief – US deputy commerce consultant Jeffrey Gerrish – appears to share the fiery disposition of his boss, USTR Robert Lighthizer.
That appears to set the stage for a tense gathering over the course of Monday and Tuesday. If incoming soundbites from its sidelines seem to substantiate as a lot, worries a few extended battle’s unfavourable implications for international progress might bitter sentiment anew. An added fiscal headwind courtesy of a nonetheless ongoing US authorities shutdown certainly doesn’t assist as nicely.
SOFT SERVICES ISM SURVEY MAY TARNISH UPBEAT JOBS DATA
Lastly, there may be US financial information to cope with. December’s service-sector ISM survey is on faucet, with expectations pointing to a slowdown within the tempo of exercise progress. A disappointment echoing the abysmal manufacturing ISM element printed final week may remind merchants that jobs information is usually a lagging indicator, warning that the present state of the enterprise cycle is in reality extra worrying.
US DOLLAR MAY RISE IF RISK APPETITE EVAPORATES
If a risk-off flip does materialize, the Yen is more likely to return to the offensive whereas commodity bloc currencies bear the brunt of promoting stress. The US Greenback may rise as its liquidity haven enchantment returns to the forefront. Certainly, this appears to be why the Dollar has confirmed to be remarkably resilient regardless of fading Fed price hike bets in current months.
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** All instances listed in GMT. See the full financial calendar right here.
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— Written by Ilya Spivak, Forex Strategist for DailyFX.com
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