A welcome boost to eurozone GDP has helped drive the euro higher, helping overshadow a set of disappointing Chinese PMI figures. Meanwhile, US-China trade talks are back on the agenda, with the markets hoping for a breakthrough as we enter the final stretch. 

•       Poor Chinese data provides weak start to trade
•       Eurozone GDP beats market expectations 
•       Trade talks resume between US and China 

Today has seen the week has kick-off in earnest, with a ramp-up in economic data releases accompanied by the resumption of trade talks between the US and China. The deterioration in a trio of Chinese PMI surveys has done little to boost the economic outlook for a country which has only recently seen its critical manufacturing sector move out of contraction.  With both the headline (50.1) and Caixin (50.2) manufacturing PMI surveys moving within touching distance of that critical 50 boundary, we have seen stocks suffer in anticipation of further economic weakness. 

The growth theme has shifted onto the eurozone in this morning’s trade, with the eurozone receiving a welcome boost after beating expectations to post a Q1 GDP growth rate of 0.4%. This is the best rate of growth since 2017 and highlights a potential fightback after a downbeat 2018. With the EU28 GDP growth rate coming in at 0.5%, there is little surprise that we are seeing gains across both EURUSD and GBPUSD in response. 

Today sees US and Chinese trade negotiators reconvene in Beijing, with markets more expectant than ever over the potential for a final resolution to these hugely important talks. The Yuan has been a key barometer of market sentiment, with the recent lull in talks seeing USDCNH drift higher as the prospect of a final breakthrough fell off the agenda. However, with the topic coming back into play, we are likely to see greater traders shift back into the Yuan if we see signs of an impending positive development. Certainly, much of the slowdown in global growth seen over recent quarters can be attributed to Trump’s actions over trade, and thus the record highs seen in both the S&P 500 and
 Nasdaq clearly reflect a feeling that we are soon to be moving into a more positive phase that will see US businesses in particular bolstered.  

Ahead of the open we expect the Dow Jones to open 17 points higher, at 26,571.

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