• Asian stocks and US equity futures trade lower overnight amid weak Chinese data
  • USD under pressure due to dovish Fed rhetoric
  • Focus on Fed Chair Powell’s speech today at 17:00 GMT

US and European equities traded higher during the day yesterday amid optimism regarding US-China trade talks. However, risk sentiment worsened overnight as most Asian stocks and global equity futures fell, weighed down by a lack of concrete details on the outcome of the US-China talks and the release of weak Chinese factory inflation
The Bloomberg USD Spot Index dropped c.0.7% yesterday on dovish rhetoric by Fed officials and a cautious stance expressed in the Fed December meeting minutes. Today’s focus is on Fed Chair Powell’s speech at 17:00 GMT
Barclays Research thinks “even in light of the strong December employment report, which came after the December FOMC meeting, the next rate hike is unlikely to occur in March and, instead, we expect it to take place in June”
Sterling remained under pressure yesterday although GBPUSD closed higher amid general USD weakness. Ahead of next week’s vote on PM May’s Withdrawal Agreement, Parliament is voting on a number of amendments and yesterday saw the ‘Grieve Amendment’ passed which means Government will have to announce its next steps within three days if PM May’s deal is defeated, as opposed to twenty-one days under the previous schedule