Asia market week ahead - Brexit vote, US-China trade talks

A relatively stale week for markets saw the Fed and Brexit updates adding some colour. The market is expected to remain on Brexit watch at the end of the month in addition to a slew of economic data for growth conditions.

Source: Bloomberg

Geopolitics in focus

The lack of volatility had been an apparent theme this week seeing the likes of the CBOE volatility index briefly touching the lowest level since early October 2018. Across the FX market, the theme had likewise been similar, underpinned by the lack of insights into the clouded outlook. US-China trade negotiations remain enveloped by a sense of uncertainty just as the Brexit conclusion gets kicked down the road with an expected vote next week.

The above said, geopolitics would be a recurring theme next week. While the dates had not been revealed, another vote is expected for the Brexit draft deal which would guide expectations on a hard Brexit and the GBP. A third failure amid no further changes to the draft deal, which is the more probable outcome at present, would see the extension last until April 12 and likely heighten the sense of a hard Brexit occurring. An amplification of the possibility for a no-deal Brexit would severely undermine the British pound. Although, in the rather fluid development of Brexit, one can only keep a close eye on developments as one would expect Prime Minister Theresa May to work ceaselessly in avoiding such an outcome.

In addition to Brexit, US-China trade talks are expected to resume in Beijing next week before officials converge again in Washington in the following week. How negotiations would go this round looks to be critical for the eventual establishment of a deal and likewise for a market that remains in waiting of a signing in April. Expect markets, particularly in Asia, to ebb and flow alongside any dribs and drabs of information. The impact from both events are also expected to be cross-asset owing to the influence the geopolitical events have upon risk sentiment.

Economic indicators watch

Meanwhile the key updates this week came from the Federal Reserve March Federal Open Market Committee (FOMC) meeting. The notable takeaway had been the Fed’s lack of confidence in the economic conditions in the US, underpinning an overtly dovish stance from the March meeting. While it remains to be seen if the market would further entertain the plausibility of an ease in the Fed’s next move, one can be sure that economic data would play a quintessential guiding role in expectations and thereby market movements.

Watch the series of releases including a third update on the US Q4 GDP. January core PCE, consumer confidence and housing starts are also amongst the releases. In addition to the series of Federal Reserve members’ appearances, these will be the items to watch for the likes of the greenback as the US dollar index figure its way out of the ascending triangle pattern as seen below.

US Dollar Basket (SD1)

Over in Asia, a splatter of data would be seen in the week. Japan’s February employment, industrial production and retail sales may be the key ones. For the local Singapore market, February’s CPI and industrial production are also lined. What would be the highlight may instead be China’s March official PMIs, released only after markets had closed on Sunday. The private Caixin gauge will be out soon after on Monday. Watch for potential cautiousness for regional markets ahead of this release after the mixed performance of February’s numbers.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG Bank.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.