*US-China trade "optimism" walked back from highs
*BoE not as unanimous as initially thought
*Aussie traders catch RBA minutes
IF being the operative word
If a phase one deal is reached, sparring powerhouses US-China have "agreed" to proportionally roll back tariffs at the same time and by the same amount. This was the news that triggered a S&P 500 Futures
test of 3,100 last night and saw US 10y yields
rally as much as +12bps. However, not long after, some headlines suggested advisors from the White House were said to fiercely oppose the idea of any rollback saying that it was not part of the "original handshake". As a result, risk took a step back from the highs. USDJPY
traded down from its highs of 109.5. USDCNH
remains marginally under 7. On a side note interestingly, this entire ordeal (see SPECIAL REPORT: The US-China Art Of War
) draws comparisons to August when China broke a supposed initial agreement to buy agriculture from the US; S&P 500 Futures
finished that month down ~8%.
Bank of England dovish
Taking stock of the BoE's rate decision last night, rates were left unchanged in line with market expectations though board members proved to be more dovish than expected. A 0-9 vote in favour of a hold never eventuated with board members Saunders and Haskel voting for a 25bps rate cut. Even BoE Gov. Carney himself, while voting for a hold, seemed dovish in his press conference citing near-term risks to growth and inflation. He mostly mentioned Brexit and global growth. GBPUSD dived on the announcement shaving as much as -70pips to trade marginally above 1.28, as markets reinforced views that the BoE could be open to a cut in early 2020 post a January Brexit deadline.
On the calendar we look forward to seeing the release of RBA minutes today at 11.30am AEDT
. This should provide some clarity around the RBA's Nov. decision to hold rates earlier in the week. However, overall implied volatility in AUDUSD
points down and therefore we largely expect a subdued response. As the RBA's Nov. rate statement seemed pretty clear cut in terms of forward guidance, we're not expecting any big surprises and should see the RBA maintain an accommodative tone