Stocks and Yields post strong quarterly start on China Rebound

Global stocks markets and bond yields got a dose of positive news after China’s manufacturing gauge posted its first reading in expansion territory since October. The market reaction was clean for stocks and bonds, but currencies posted mixed results. The dollar was mixed against most of its major trading partners, while safe-haven currencies such as the yen and franc fell. The Australian dollar gapped higher but was unable to keep gains ahead of its interest rate decision later tonight.

Brexit – MPs fail to back proposals again

AUDUSD – Pares gains ahead of RBA and budget

Oil – Benefits from China infused rally

S&P 500 – Stocks off to a great start to Q2

Lira – Firms as markets expect Erdogan to become more market friendly following big election losses

Gold – Sinks as global concerns ease


Parliament rejected all Brexit alternatives in the second round of indicative votes. The British pound sold off after the vote as the odds of a no-deal Brexit climb higher as we now have 10 more days till Parliament needs to agree on the next step.

Another day of intense Brexit debate in Parliament yielded nothing but some resignations. Conservative MP Nick Boles resigned from the Tory party after his enhanced Norway-style Brexit deal, also know as Common Market 2.0 was voted down 292 to 280. The option for a permanent customs union was also narrowly defeated by 3 votes, 276 to 273.

While no-deal risks grow, the base case remains for the UK to get a longer extension from the EU to start over from scratch. PM May will discuss her options tomorrow in a cabinet meeting, but it appears she may try to push through another attempt of getting her deal across the finish line.


The FX market normally rejoices in buying the Australia dollar on surprising better than expected Chinese data, but this time is different, as expectations are for them to highlight the downside risks to the economy at Tuesday’s rate announcement.

The RBA is widely expected to keep policy unchanged and likely to keep looking for further data deterioration before switching to an easing bias. Expectations are a coin flip for the Bank to cut rates at the July 2nd meeting.

Five hours after the RBA rate decision, the Treasurer Josh Frydenberg will present his budget to parliament in Canberra. The budget will snap a streak of deficits that have been in place since 1970, but it all might be for nothing, as Labor appears poised to take over the reigns following the May elections.


West Texas Intermediate crude is on fire following last night’s Chinese data that eased global growth concerns. Oil continues to be well supported from the OPEC + production cuts. Saudi Arabia has led the way with production reduction to a 4-year low of 9.82 million barrels a day in March according to a Bloomberg survey.

Expectations for the EIA’s crude oil inventory report is for a draw of 417,000 barrels, with the range of estimates going from a draw of 3 million to a build of 1.5 million barrels. Price action on the WTI daily chart shows price is testing the 200-day SMA, which currently trades at $61.65.

S&P 500 keeps momentum going

US stocks posted a strong start to the second quarter, following the best start since 2009. The trigger for today’s rally was the better than expected Chinese manufacturing data that eased many globlal growth concerns. Combined with trade optimism and accommodative monetary policy stances globally, stocks appear to the best asset class today.

As we approach earnings season, expectations are pretty low for the first quarter. With negative growth priced in around at a decline of 3.7%, many analysts are looking forward already to the second half of the year.

Turkish Lira

Lira volatility accelerated with investors concluding that President Erdogan will need to assume more market friendly policies, following the worst political defeat in almost two decades. The Turkish lira went into freefall last week after the government restricted foreign investors selling the lira ahead of key municipal elections. Erdogan’s ruling AK party lost key elections in large cities, but the worst of it may be the fear investors may have on taking long-term positions with Turkish markets.

Turkish financial markets will likely return to normal trade after the reopening of one-week money auctions. The lira rout may be tentatively over as we could see a strong bid stem from the positive risk flow emerging market currencies are seeing.


The dovish stance signalled by most of the major central banks around the world is helping alleviate global growth concerns and that has not been friendly to gold prices. The precious metal saw most of its gains capped last quarter on trade deal optimism, but we could see some further pressure as markets reprice the amount of weakness they saw for first half of the year.


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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.