Awaiting news from Beijing

Market movers today

• Key focus remains on trade negotiations between the US and China as two days of high level talks have started in Beijing today. Focus at these meetings are on how to enforce a trade deal with the aim of finalising a framework. According to Chinese media US representatives Mnuchin and Lighthizer will meet China president Xi tomorrow.

• Today's highlight in the euro area is the German GDP figure for Q4 2018. We expect the German economy avoided slipping into technical recession, however the quarterly growth pace is likely to have remained subdued at 0.1% q/q. In Q3, the German economy experienced its first contraction since 2015 with GDP growth rates at -0.1% q/q. External factors such as the trade war, Brexit, as well as domestic problems in the car sector and low water levels in the Rhine River continued to hamper activity in Q4. (see Research Germany- The epicentre of the euro area slowdown , 27 January).

• In the UK , the House of Commons will vote on Brexit. While the next 'meaningful vote' on a full Brexit deal has been postponed as PM Theresa May and the EU27 have agreed to continue negotiations in late February, this is an indicative vote. May will deliver a statement to the Commons, which the MPs will vote on and which is amendable. Based on what we know so far, we may be in for another "kicking the can down the road", as PM Theresa May has promised another vote also late-February. Bloomberg has a good overview here. The vote begins 18:00 CET.

• In the Scandies focus turns to Swedish labour market data and Norges Bank's Olsen's annual address to the Norwegian people. For more information see Scandi page 2.

Selected market news

US equities ended yesterday in green on the back of not least Trump further opening the door for an extension of the trade truce with China if the parties were close to a "real deal". Meanwhile, comments from Senator Marco Rubio that he intends to submit a bill to tax corporate buybacks limited the equity rally. This morning most Asian equity indices are trading flat in a fairly eventless session as markets await news from Beijing on trade talks. Chinese trade data showed a surprising rise in exports but the shutdown for Lunar New Year - which this year comes 10 days earlier - likely boosted the figures.

Yesterday the Spanish minority government lost a vote on the 2019 budget bill in parliament, putting snap elections in Q2 19 back on the cards. Markets shrugged off the risk of renewed political uncertainty in Spain, as the economy remains solid and as the risk of a euro-sceptic government is small, as the three leading parties all have pro-EU views.

The Riksbank meeting yesterday played out more or less as we expected: the rate was left unchanged, as were both the rate path and the inflation forecast, while the projected growth for 2019 and 2020 was revised marginally down. The board did comment on the increased downside risks to global economic outlook, but did also point out that they still see fairly good economic activity over the next few years, with "low unemployment and rising wage growth in many countries". The only real news was that the FX intervention mandate was not renewed which contributed to a stronger SEK, see FX Section page 2 . We still do not expect any 2019 Riksbank rate hikes following the announcement.

Download The Full Daily FX Market Commentary