The Chinese economy expanded 6.8 percent
Concerns over the geological situation have eased off
The dollar index is still under pressure
Sterling has hit 1.4346 against the dollar, the highest level seen since Brexit June 2016
Traders have paid close attention to the Chinese economic data and the reaction has been mostly positive. The Chinese economy expanded 6.8 percent during the first quarter of 2018. Of course, the reason behind the optimism in the markets is because the Chinese GDP number came ahead of the forecast of 6.7%. There was some disappointment in the fixed asset investment growth number because that number fell well short of expectations. The reading was 7.5% while the forecast was 7.6% over the first quarter of 2018.
Back in the US, concerns over the geological situation have eased off and this pushed the S&P500 back into the positive territory. Investors are going to pick up the momentum where they left off yesterday and the focus will remain on the earning season.
In the currency market, the dollar index is still under pressure, thanks to the Trump's tweet which has made many speculators nervous because the word trade war has still its presence but just in another context. President Trump tweeted yesterday that both China and Russia are being unfair and devaluing their currency. This is enough of a clue for currency traders that something big could also take place for the dollar index given the nature of the President. Although, the reality paints a different picture; the Russian Ruble has sunk purely because of the sanctions and the Chinese Yuan has in fact strengthed to a level which is not seen October 2015.
Having said all this, the currency which deserves the most attention is the British pound. It has hit 1.4346 against the dollar, the highest level seen since Brexit June 2016. Traders have pushed the currency higher ahead of the important upcoming wages and unemployment data, perhaps there is a real optimism amidst them. We do think it is a bold move because most of the bets are based on the hopes that the health of the job market would permit the Bank of England to adopt a more aggressive stance towards their monetary policy. If the numbers do show that the wage data has the ability to outperform the strength in the inflation, it would firm the bullish bets on Sterling.