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Deal takes headlines but data drives

Reports that China and the US are close to a deal on trade lifted sentiment on Friday night. However the growth positive moves came as data around the globe surprised on the upside. The US dollar is in focus this morning after President Trump complained that it is too strong, but improving sentiment saw it rip higher against the safe haven Yen.

Manufacturing indices in China, France and Italy beat forecasts on Friday. German retail sales were also stronger, and US inflation data dropped in line at 1.9% and close to the Fed’s 2% target. This provided the backdrop for a surge in steel, iron ore and nickel markets, and underpinned gains for stocks. The positive momentum means futures markets are pointing to opening gains for Asia Pacific indices.

The market calendar shows a busy week. Highlights include China services PMI tomorrow, German construction numbers on Wednesday and US non-farm payrolls and accompanying wages data on Friday night.

Australian building approvals for January are today expected to show a bounce back of 1.5% after December’s 8.4% plummet. Inventories are forecast to show 0.3% build for the fourth quarter, and traders will examine the numbers closely for clues to GDP data due Wednesday.

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