In a widely flagged speech yesterday China’s President Xi struck a mature and conciliatory tone on global trade. Relieved investors piled into shares, and welcoming comments from US President Trump further fuelled the enthusiasm. Industrial commodities and related currencies rallied, and bonds slipped again. Asia Pacific markets reacted yesterday and futures markets are pointing to minor gains today despite the global strength. Upside surprise is on the martket menu today.

As trade concerns ease, investor focus may return to the macro data, ahead of the start of the US reporting season on Friday. Inflation data from China could set direction for the second half of today’s trading session, and US inflation numbers tonight will also speak to the key market themes of improving growth and higher interest rates.

Currency markets are fracturing. The US dollar gained against the Japanese yen overnight, but slipped against the Euro. The strength in commodity prices saw traders ignore the US dollar moves to buy the Norwegian Kroner and the Canadian, New Zealand and Australian dollars.

The international support for risk assets suggests a turning point for sentiment. While a single ill-considered tweet could still derail the movement the bias ahead of key market events is positive.

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