Talking Points:
- Asian stocks managed to follow Wall Street higher
- Japan got a special boost from some very upbeat export data
- The US Dollar went back on defense against most rivals, the Aussie Dollar being an exception
Asian stocks crept back up toward three-month highs on Wednesday as Wall Street managed a stronger session on Tuesday,although uncertainty still hovers over what Donald Trump’s White House will mean for the wider world.
The US Dollar meanwhile continued to drift, and the overall market tone remains uneasy.
In Tokyo, the Nikkei advanced 1.3%. News that the Japan’s exports rose for the first time in fifteen months in December, led by shipments of car parts and electronics, lifted the mood. That mood had lightened somewhat anyway thanks to new record highs for the S&P 500 and the Nasdaq in the previous US session.
Australia’s ASX was up by 0.4%, with raw materials still doing a lot of the heavy lifting.
In the currency markets, the greenback was playing defense again after a respite on Tuesday which came as Donald Trump seemed to shift his focus toward growth plans. He promised corporate tax breaks to boost investment, a break from recent more protectionist rhetoric. The US Dollar drifted lower once more through the Asian session, to the benefit of all the majors.
The Australian Dollar made heavy weather after the release of more tepid inflation data, which suggest that local interest rates won’t be rising anytime soon even if they retreat no further from current record lows.
Tough day: AUD/USD
Chart compiled using TradingView
The British Pound managed to add to its recent gains, following Tuesday’s Supreme Court ruling that gave Parliament the right to decide on when the UK can trigger its official exit from the European Union. Markets now seem to want this process to move along. The ruling is seen to have helped this as much as it could, allowing Parliament a say but denying devolved institutions in Scotland, Wales and Northern Ireland any power of veto.
Oil markets gave back some of their recent gains, although not by much, with international benchmark Brent down about 0.1% as Asian trade wound down. Gold took a bit of a knock from stronger risk assets, but steadied around $1,210.
The coming session doesn’t offer much in terms of economic data, with due respect to Germany’s monthly IFO business survey and the weekly US crude oil inventory figures from major hub Cushing, Oklahoma. This may leave investors focused on the White Houseonce again. President Trump’s reported plans to mandate the building of a wall between Mexico and the US by executive order, along with the curtailment of some visa privileges to nationals of six Middle Eastern counties including Syria and Iraq, may hit the headlines.
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
