There have been fresh airstrikes on Syria overnight, with an attack on targets and airfields near the Israeli border. The US has said that it isn’t conducting any military activity in the area. Syrian air defences have engaged and intercepted missiles. This has led to very little reaction in markets so far, as details surrounding the origin of the attack are currently unavailable. Yesterday’s trading showed a break down in correlation as FX took control and indices moved in conjunction with their currencies. European indices were down; the UK 100 fell -0.91% to close at 7198.20, while GBPUSD rose to 1.43377 from 1.42366. US Indices climbed higher, with the US 500 Index up 0.81% to 2677.84. China has told the UK that a failure to reach a deal with the EU regarding Brexit would lead to no trade deal between the two nations. “Only a deal with the European Union will pave the way for the UK to hold more detailed” talks with big markets”, according to Zhang Ming, head of the Chinese mission to the European Union. This reflects the weaker position the UK will face upon leaving the EU. “If there is not a Brexit deal, there won’t be things to talk about after that,” he told Politico. “If the EU and the UK fail to reach agreement in the first place, the UK’s agreements with other parties may have to face great uncertainties.” US Retail Sales (MoM) (Mar) was released at 0.6% v an expected 0.4%, from -0.1% previously. Retail Sales Ex-Autos (MoM) (Mar) was as expected, unchanged at 0.2%. Retail Sales Control Group (Mar) was also as expected at 0.4%, from 0.1% prior, which was revised down to 0.0%. This data rebounded this month after slipping below zero over the previous two readings and missing expectations. This month matched or exceeded expectations, putting the data back on track and making up for the seasonal and weather-related drop. USDJPY moved higher from 107.242 to 107.386 after this data release. FOMC Member Kaplan gave a speech with the following comments: Cyclical wage pressure will build in 2018 and unemployment will fall to 3.7%. The pricing power of business is more limited than we are used to seeing at this stage in the cycle. Sub 2% growth is expected in 2020 as fiscal stimulus fades and monetary policy tightens. Trade is a critical opportunity for faster growth. Without structural reforms, the US will be sluggish in the mid and long-term. He remains very concerned fiscal stimulus will turn into a headwind in 3 to 5 years. He expects 3 rate hikes this year, more next year. The 10-year yield at 2.85% puts a limit on how high they can raise rates. He thinks Powell is likely to continue with a gradual, patient approach. He states that the US cannot cut immigration and simultaneously grow GDP and the workforce. FOMC Member Bostic spoke about the economy at the Shoals Chamber of Commerce, in Alabama. The following comments were made: The …
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