Asia Pacific Market Open Talking Points
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Key FX News Monday
The anti-risk Japanese Yen and Swiss Franc were the worst-performing majors on Monday, sinking with a pickup market mood. Optimism began in early Monday trade where upbeat Chinese PMI data crossed the wires[2]. S&P 500 futures rose and preceded a 1.16% rally in the index when trading began on Wall Street. That was the S&P’s best performance in 3 weeks.
Sentiment picked up later in the day when better-than-expected US ISM Manufacturing PMI data crossed the wires, clocking in at 55.3 versus 54.5 expected. Softer-than-expected domestic retail sales for February were brushed aside when that was released an hour and a half earlier. Local bond yields climbed, showing a softening in dovish Fed monetary policy expectations which benefited the US Dollar[3].
As the markets transitioned into Tuesday, the British Pound[4] tumbled after the UK Parliament yet again failed to reach a consensus for an alternative to Theresa May’s Brexit deal[5]. This increased the threat of a ‘no deal’ divorce with the withdrawal deadline on April 12th fast approaching. Meanwhile, anti-fiat gold prices[6] declined amidst a stronger Greenback, as anticipated[7].
Tuesday’s Asia Pacific Trading Session
Top tier event risk for Tuesday’s Asia Pacific session is the Reserve Bank of Australia rate decision. Overnight index swaps are pricing in about a 75% chance that the central bank could cut benchmark lending rates by the end of this year. This has followed increasingly cautious outlooks from
