Equity markets build on yesterday’s gains

Positive trade vibes help sentiment

It was a bullish day across the board for Asian equity markets as investors absorbed a more positive outlook on the US-China trade turmoil. China is reportedly considering a review of its “Made in China 2025” program, possibly toning down plans to dominate global manufacturing.

Currency markets also embraced the better mood, with the Australian dollar gaining 0.25% versus the US dollar and USD/JPY rising 0.14% as yen’s safe haven demand waned. The US dollar was slightly lower across the board.

 

Pound’s gains falter

While the uncertainty of a leadership challenge within the UK Conservative Party has now vanished, the uncertainty surrounding the future of the Brexit deal is still around, and could prove to be more lengthy and complex to resolve. Reports suggest that the parliamentary Brexit vote is unlikely to happen before the parliamentary recess starts on December 20, leaving an uncertain time for the pound through in to 2019.

The pound posted its biggest one day gain versus the US dollar since November 1 yesterday as PM May survived the vote of no confidence. Upward momentum waned somewhat in Asia, with GBP/USD sliding 0.05%.

 

GBP/USD Daily Chart

Source: OANDA fxTrade

 

ECB to complete stimulus wind down

The European Central Bank is expected to bring to an end its EUR2.6 trillion stimulus package that has been in place for years. Aside from that, today’s ECB meeting is not expected to present any shift in the monetary policy outlook, but a more-dovish tone to Federal Reserve rhetoric and European data that has failed to impress, we could hear the most dovish press conference from Mr Draghi in a while.

This could have negative connotations for the Euro which has gradually been trending higher from the near-term low a month ago. EUR/USD faces moving average resistance at the 55-day average of 1.1413, which has capped prices since October 16.

 

EUR/USD Daily Chart

Source: OANDA fxTrade

 

SNB to keep lowest global rates

The Swiss national Bank holds its monetary policy meeting today and is expected to maintain rates at the lowest levels in the world.

German consumer prices are not expected to agitate markets, with expectations for an unchanged 2.3% annual gain. The US session is also devoid of tier-1 data, with import and export prices the only data points scheduled.