Currencies, bonds and stocks marked time overnight as markets wait for the next trade shoe to drop. European shares and the British Pound made modest gains on positive Brexit commentary, but US markets lagged as pressure fell on blue chip stocks. Futures are pointing to a mixed start for Asia Pacific trading.

Sterling starred on forex markets, lifting above $1.30 US after the EU’s chief negotiator said a deal is both realistic and possible in the next eight weeks. The Euro gained modestly, perhaps reflecting a slightly softer US dollar rather than a positive for the continent.

A busy market calendar later this week may see languid action today. The European Central Bank and Bank of England will deliver interest rate decisions on Thursday, amid US and European inflation reads, China industrial production and retail sales, and Australian employment data.

Markets in Hong Kong and Shanghai are set for further losses as investors anticipate further escalation of trade conflicts. This contrasts with a modest climb in Japanese and Australian index futures overnight. Lower currencies may hold the key. Both share markets recovered from losses yesterday as the Yen and Australian dollar held near recent lows. Investors appeared to hone on the stimulatory effects of the strengthening US dollar.