Today the financial markets continue to enjoy a surge of optimism. Most of this is caused by the upcoming signing of a trade deal between the United States and China, scheduled for tomorrow.
The stock markets today are not growing as rapidly as yesterday, when they rallied amid the good news. Riskier assets, on the other hand, continue growing in value. Meanwhile, safe haven instruments such as the Japanese yen and gold are slumping due to low investor interest.
The most important fundamental report today that has to do with currencies will be the December CPI reading from the United States. Inflation is expected to be stable or growing; if the result fails to meet the forecasts, it will shock the markets because it would be highly unusual. A normal or better-than-expected result will further confirm that the Federal Reserve has no reason to lower interest rates any further in the near future.
We also received key data on trade from China today. In December, exports grew by 7.6%, and imports increased by 16.3%. These results further boosted the markets and contributed to higher risk appetite. Nevertheless, we do not expect that the same results will be true for January, as the surge is likely caused by businesses trying to avoid the December 15 tariffs (which ended up being canceled).
