AUS Open: APAC equity markets follow Wall Street higher; Dollar under pressure

Market Analysis /
Milan Cutkovic / 07 Jan 2019

Weekend Recap:

* APAC equity markets are likely to have a strong start into the new trading week, following a +3.43 % rally in the S&P 500 on Friday
* Decent US employment numbers + dovish comments from Fed´s Powell gave stocks a boost on Friday
* Powell signalled that the Fed is listening carefully to the concerns of the market
* Fed prepared to adjust policy flexibly if needed; data suggests inflation not a huge concern at the moment


* The US Dollar could come under increased pressure in the short-term as dovish comments from Fed´s Powell weigh on the currency

* EUR broke above 1.14 against the Dollar; GBP back above 1.27
* Expect higher volatility in the GBP pairs this week as the drama around Brexit continues
* Demand for the Japanese Yen is set to decrease amid an improvement in risk appetite in global equity markets

* Canadian Dollar is benefiting from a weaker USD & rising Oil prices

* Gold may remain in demand as uncertainty in markets still high & Dollar under pressure

The Week Ahead:

* A US delegation will meet with Chinese officials in Beijing. The market is hopeful that the tensions between the USA and China will ease and that some progress will be made during the trade talks.
* The Federal Reserve will release its meeting minutes from the December meeting. It is unlikely that there will be any major surprises.
* The UK parliament will resume a debate on the Brexit withdrawal bill. Time is running out, and the pressure on UK PM May is increasing.

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