In overnight trading bond investors curbed their enthusiasm for lower interest rates, easing pressure on risk assets and calming currency markets. The British pound was a notable exception, slumping after parliament deferred a vote on another iteration of a Brexit agreement. A stronger US dollar put pressure on commodity prices, with WTI slipping below $60 a barrel and gold below $1,300 an ounce.

Asia Pacific markets are set for a mixed start. The lack of a strong response to overnight action may reflect looming event risk. Any announcements from the trade negotiations in Beijing have the potential to change the course of global markets. While modest disappointment as substantial agreement remains elusive is a likely scenario, any breakthrough in key areas such as intellectual property and existing tariffs could spark risk positive responses.

Economists will tune in to Tokyo today for inflation, industrial production and retail sales data. Ironically, good numbers here could see a weaker Yen as investors move away from safer havens. After weaker than forecast CPI reads in Germany last night investors will seek better news in German retail sales, French inflation and UK GDP data tonight. The numbers overhang may see lower local trading volumes today.

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