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The global equity rally continues to be bolstered by optimism that the trade war could finally see a framework agreement. The US also avoided a second government shutdown as President Trump accepted the deal lawmakers worked on, only to declare a national emergency to secure additional funds for his border wall funding.
The S&P 500 rose to a 10-week high as trade talks continued to make constructive progress this week and US consumer sentiment showed signs of stabilizing. The main driver for equities remains the trade story and while global growth concerns are the other key risk, the current backdrop of accommodative stances with the Fed, PBOC, and ECB, may make it difficult to derail the bullish argument.
The US dollar continues to whipsaw on risk-off flows from softer US economic data and risk-on moves from continued progress on the trade front. The Fed has clearly signaled interest rates are not going up anytime soon and we could finally learn more in the coming weeks on when the Fed will end quantitative tightening. On Thursday, Fed’s Brainard noted that balance sheet normalization could come to an end this year. Next week, the markets will dissect the Fed’s Minutes on Wednesday and the Fed’s Monetary Policy Report on Friday, along from hearing from Fed members (Williams, Clarida, Bullard and Quarles).
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With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya
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