In a burst of optimism investors and traders responded positively to moves by both China and the US to shore up their economies. Despite the possibility that both sides of the trade dispute are preparing for escalation, industrial metals and shares delivered gains. In contrast the US dollar and bond markets were largely unmoved. Time will tell whether they are unfazed or frozen in the headlights.

The moves by authorities to support small and medium enterprises with tax breaks helped stabilise copper markets. Similarly the announcement of a support package for US farmers, alongside stronger company reports, soothed investor nerves.

The short term optimism may lift Asia Pacific markets today with futures trading pointing to opening gains. Commodity currencies featured in overnight trading and the Australian dollar regained levels above 74 US cents. Australian inflation data due later this morning could prove a game changer, especially if its shows the annual inflation rate is higher than 1.9% at core levels. Stronger data would push rate rise expectations, potentially support the Australian dollar and paint a stronger picture for investors.