Global market wrap - mixed sentiment - TDS

In a market wrap, analysts at TD Securities explained the market sentiment was mixed.

Key Quotes:

"Market sentiment was mixed as reports of further progress on Brexit were accompanied by more rhetoric from President Trump on US/China trade tensions ahead of another round of talks. US equities (+0.5%) ended the session higher to outperform the TSX (-0.3%). Neither Treasuries nor Canadian rates saw any significant moves although the latter outperformed by ~1bp across the curve to tighten CAD-USD spreads.

The USD continues to trade on its back foot against G10 FX with JPY (-0.6%) the sole currency to underperform. EUR (+0.6%) rallied out of the ECB meeting while GBP (+0.5%) pushed higher on Brexit developments.

The local data calendar is quiet into the weekend, leaving a Carney speech and US retail sales to share the spotlight."

What We're Watching in Markets
"We think this month's ECB meeting adds to an increasingly-bullish backdrop for the EUR as the USD's summer rebound looks exhausted. A more positive macro, policy, and technical picture have us looking for further gains in coming weeks. Given the highly uncertain global landscape, however, we prefer positioning via shorter-dated calls or (zero cost) risk reversals. Furthermore, the disappointment on CPI provides further evidence that the USD rally is near its peak as valuations are getting stretched and positioning is lopsided. We continue to like AUDUSD upside towards 0.75. Amid improving sentiment around the Brexit negotiations, we receive 2y2y USD swap vs paying GBP 2y2y swap."

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