Global equity markets continued to rally yesterday led by US stocks making new record highs after the US Senate reached a temporary agreement to end the government shutdown. Funding was extended until 8 February but USD was largely unchanged.
Asian equity markets have followed their US counterparts higher overnight with the Nikkei 225 hitting a 26-year high and the Hang Seng reaching a new all-time high.
GBP continued to strengthen yesterday as investors digested Macron’s more accommodating stance to Brexit as expressed in an interview over the weekend. GBPUSD traded above 1.4000 for the first time since the Brexit vote and EURGBP broke below its recent support level at 0.8800.
GBPUSD support now comes in at 1.3925 with resistance still at 1.4000 as it failed to sustain a break above that level overnight. Meanwhile, EURGBP support is found at 0.8690 with 0.8800 now acting as a resistance level.
The BoJ kept its monetary policy unchanged overnight as expected, but raised its assessment of current and expected inflation. JPY rallied initially on the news but has since retraced most gains.
Barclays Research expects the BoJ to ” …retain its current easing stance through H1-18, then take its first step toward normalization with revisions to its yield curve controls in Q3”.
The sixth round of negotiations on NAFTA resumes today in Montreal and a joint press conference has been scheduled for 29 January. The US administration is expected to shift its focus to trade now that tax cuts have been passed and a flare up of tension could have an impact on markets.
In South Africa, the ANC appears to have agreed on Zuma’s exit as South African President. Zuma’s successor, Ramaphosa, is already beginning to deliver on his promises to tackle corruption and improve governance which has benefitted ZAR