Here are the latest developments in global markets:
- FOREX: The US dollar held steady versus the Japanese yen today (+0.04%), taking a breather after last week’s rally. The US dollar index fell by 0.28% though, currently hovering just below the 90.00 handle. Traders are awaiting the US labor market data on Friday, which are expected to show a drop in the unemployment rate to its lowest level since 2000. Moreover, investors will keep their focus on any news regarding trade and protectionism, following the recently-announced tariffs by China against the US. Euro/dollar was trading marginally higher by 0.05% during today’s European session, while pound/dollar advanced by 0.31%, surpassing 1.4050. Antipodean currencies were mixed, with aussie/dollar up at 0.7681 (+0.04%), but kiwi/dollar down at 0.7232 (-0.03%). Dollar/loonie was last seen at 1.2875 (-0.12%).
- STOCKS: In Europe, all of the major benchmarks remained closed today in celebration of the Easter Monday holiday. In the US though, trading will resume today as per normal. Futures tracking the major US benchmarks are currently flashing red, pointing to a lower open, possibly due to the news that China will introduce tariffs on the US effective today. In Asia, Japan’s Nikkei 225 and the Topix closed 0.3% and 0.44% lower, both indices unable to sustain early gains.
- COMMODITIES: In energy markets, West Texas Intermediate (WTI) crude oil and London-based Brent crude edged higher today. WTI was up by 0.28%, slightly above $62 per barrel, while Brent jumped by 0.52% at $69.70 per barrel. In precious metals, copper surged by 0.93% and gold prices rose by 0.58%.
Day ahead: US data and RBA decision on the agenda as markets await trade updates
With most European markets still closed, attention will likely remain on any potential updates in the “trade war” narrative. Besides any trade news, there are some US economic data and a speech by an FOMC policymaker on the agenda for today. A few hours afterwards, during the Asian session on Tuesday, all eyes will turn to the Reserve Bank of Australia’s (RBA) policy decision.
On the subject of trade, investors will likely remain vigilant for any comments from the US administration regarding the recently-announced tariffs by China. Any hints of countermeasures would likely amplify concerns that the situation could escalate further and thereby, curb risk appetite.
In terms of economic data, the most noteworthy release will be the US ISM manufacturing PMI for March, at 1400 GMT. The index is expected to have declined to 60.0, after reaching a 14-year high of 60.8 in February, signaling that the manufacturing sector may have lost some speed but still remains on a very healthy track. The final Markit manufacturing PMI for March is also due out at 1345 GMT, though investors tend to pay more attention to the ISM print.
In Canada, the Markit manufacturing PMI for March is due out as well, at 1330 GMT.
At 2200 GMT, Minneapolis Fed President Neel Kashkari (non-voter) will deliver remarks. Although Kashkari has traditionally been on the dovish end of the spectrum and has voted against previous rate hikes, he recently said he supported the latest hike in March. If he reiterates a neutral view, that would be another indication that even the most cautious FOMC policymakers are becoming more confident in the economy’s outlook.
Looking further ahead, the RBA will announce its rate decision on Tuesday at 0430 GMT. The Bank is widely anticipated to stand pat, so attention will likely turn to the statement accompanying the decision for fresh policy signals. Recent Australian data and developments have been mixed, so policymakers are unlikely to change their neutral tone based on that. Having said that, it would be interesting to see if officials make any mention of the recent trade uncertainties, and whether those are posing downside risks to Australia’s economy. If so, the Aussie could come under renewed selling interest.