- Renewed optimism surrounding trade joined welcome data.
- Brexit risk and the key data/events remain in the spotlight.
Forex today remained mostly risk-on as positive news concerning the US-China and the US-Japan trade negotiations initially built the sentiment while better than forecast quarterly retail sales from New Zealand held the recovery intact during the early Asian session on Wednesday.
While Japanese trade negotiator confirmed work done for minister-level trade talks, the Chinese ambassador to the US showed readiness to break the trade deadlock and import more goods and services from the world’s largest economy.
New Zealand’s first quarter (Q1) 2019 retail sales grew past 0.0% forecast to +0.7% while retail sales ex-autos, mostly known as core retail sales, also rose 0.7% but lagged behind 0.9% market consensus and 2.0% previous readout.
Wall Street cheered the US Commerce Department’s temporary relief to China’s Huawei with a 90-day window. Dow Jones Industrial Average (DJIA) marked +0.8% gains while S&P500 and Nasdaq grew 0.85% and 1.08% respectively.
Global risk barometer, the US 10-year bond yields, was in the green region to 2.428%.
Brexit news was all around in the market by the end of Tuesday as the UK PM Theresa May outlined her 10-point Brexit plan to the members to the British parliament (MPs). Commitment to hold votes on the form of a possible customs union with the EU and a second referendum grabbed major market attention. However, the condition that those benefits could only be availed if MPs vote for the present deal hurt risk tone afterward.
Looking forward, the UK consumer price index (CPI), Canadian retail sales and minutes of the latest Federal Reserve monetary policy meeting will be the key economic data to watch. While UK CPI may rise to 2.2% from 1.9% on YoY, Canadian retail sales could also grow 1.1% from 0.8% earlier on a monthly basis. Further, the Fed minutes might reiterate its neutral tone but recent positive data could be spotted as a support to avoid bearish bias.
Meanwhile, political plays concerning the US, UK, Iran, and China could keep entertaining momentum traders.
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