A series of geopolitical headlines stirred the global financial markets overnight and boosted market volatility. The British Pound saw greater volatility after reports that the UK Prime Minister received agreement from her cabinet on a draft Brexit deal. The Pound dipped below 1.2890 and bounced through 1.3060 in roughly 3 hours.

It is still a key unknown if the deal could go through parliament, and the draft deal lacks information about trade regulations in the future. Uncertainties remain and could be translated into higher volatility. The UK Retail Sales data due tonight could affect the Pound but investor behaviour remains sensitive to political headlines. Any contents about the draft Brexit deal containing keywords such as “no progress”, “no deal”, or “victory”, are potential Pound market movers in the next 24 hours.     

On another continent, US equities closed lower on continuing international trade disputes and mixed economic data. The North America Trade Deal between the US, Mexico, and Canada is scheduled for signing on 30 November during G-20 Summit. Changes may be required before potentially getting approval from a politically divided Congress in 2019. The Canadian dollar and Mexico Peso both saw losses and exhibited higher volatility. On the other hand, the US dollar slid after the US CPI matched expectations but the core inflation reading fell slightly. This mixed signals in CPI distorted market expectations on future rate lifts by the Fed, possibly a key pressure that pushed the US 10 year bond yields down closer to 3.12%. Geopolitical factors and negotiations on international trade disputes may remain a key market mover in both currency and equity markets until world leaders meet at the G-20 Summit.

Investors and traders may have to decide whether to base their action on geopolitical headlines or global economic activity due in the next 24 hours. Australia Wage Data delivered no surprises yesterday, but the employment data due this morning could support the Australian dollar if market expectations are met. Further, US Unemployment Claims and Retail Sales data due tonight could move the US dollar and potentially inject higher volatility into currency markets. Last but not least, oil markets halted their 12-day losses and bounced after the reports that OPEC and its allies are in discussion to cut supply in 2019. The key driver behind oil markets may shift towards the debate on global supply. However, the US Department of Energy Crude Oil Inventory report, and any tweets from President Trump regarding oil prices could exert higher pressure on oil prices in the short run.

Futures markets are pointing to a mixed start for Asia Pacific equities. In particular the Hong Kong stock markets are set for a positive open after the Chinese tech giant Tencent reported a higher profit after the stock market closed yesterday. Regional investors could face higher volatility today if speculators tend to asset allocation repositioning amid uncertainties.  

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