Markets Remain Cautious After Further Political Upheaval In Washington

The markets had a relatively steady day yesterday after earlier disruption. We saw an initial pull back in the ‘Trump Trade’ of higher dollar and risk and news filtered through of Trump’s sacking of the FBI Director (it did literally filter through to him as he first saw it on a TV report) but the market did recover as we moved through the sessions. As we open the Asian session the Dxy is back up to 99.60 and UsdJpy is challenging Tuesday’s highs.

Given what we have already seen from the new administration in the US in the first 100+ days and especially in relation to the President there is always going to be an amount of caution in the market with regard to it’s ability to deliver on it’s promises and to throw the odd curve ball (or googly for the cricket enthusiasts!) into the mix.

Elsewhere in the market we skipped through Mario Draghi’s speech with little affect on the Euro and got a few more Hawkish comments from the fed’s Rosenberg which helped the dollar rally.

The RBNZ however, has knocked the Kiwi substantially this morning by over a big figure, as the statement and following press conference were much more dovish than expected. NzdUsd is now down to 0.6825 have been up near 0.6940 before the release and AudNzd has shot up from 1.0620 to 1.0770 so far on the day.

Looking ahead to today and first up we have more from the RBNZ as Governor Wheeler testifies before the Finance and Expenditure Select Committee in Wellington at 11.00 am, however I think the damage is pretty much done now and any continuation of this mornings explosive move will be more sedate.

Into the London session and we have UK Manufacturing Production data due at 6.30 pm but this is superseded by the Bank Of England Rate release at 9.00 pm, it’s been a big month for the UK (think Brexit negotiations and pending election), so this will be the main focus for the market this evening with traders paying particular attention to the inflation report and the Policy Summary.

Later, into the US session and we have the US PPI m/m and the weekly unemployment claims due out at 10.30 pm.

So a potentially big day ahead for the markets with the main focus being the ‘Old Lady’, however, traders will also be keeping a very close eye on the news wires for any further ructions out of Washington.

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