While sentiment is still driving the Trump Trade along, developments in the oil market have seen the loonie take flight against a US dollar that is still marching forward in the excitement that Donald Trump is the second coming of Ronald Reagan. What has been driving both the loonie and oil higher has been the potential outcome of today’s OPEC meeting. Long rumoured production cuts might actually come to the fore giving hope to oil and loonie bulls despite a long history of disappointment when it comes to actual co-operation amongst OPEC members.
Outside of the meeting, today remains a very data-heavy day, with European CPI and monetary policy, American Jobs, Canadian GDP and Chinese manufacturing all being touched upon. While European CPI and comments from Mario Draghi are sure to move markets the ADP payroll report stateside came in much better expected which along with better than expected GDP read signalled that DJT is sure to inherit an economy running on all cylinders. In terms of price action, aside from the rapidly increasing value of crude, equity markets globally remain on a firm footing as prices march upwards while bond yields remain on the back foot as markets buy into the narrative of continued economic strength due to rather vague commitments to further infrastructure spending in the United States.
Outside of the sentiment driving equities, the pricing patterns seen since the beginning of the Trump Trade are holding out. The USD remains at 14-year highs, while the Euro has dipped slightly and the pound has taken a knock after Mark Carney reiterated the uncertainty facing the British Economy. In Asia, the yen moved lower, while the same commodity-linked ebullience that has the loonie flying higher did not reverse the fortunes of the sliding Aussie and Kiwi Dollars.
With the sentiment driven Trump Trade set to continue, all participants must be reminded that markets run on emotion and as such are as fickle as a toddler. Should OPEC not come to an agreement today we could very easily see toys getting thrown out of the pram.
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