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Markets Playing It Safe Ahead of Key Developments, Says Scotiabank

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Global markets are playing it safe so far on Wednesday ahead of several developments, said Scotiabank.

These include later in the day FOMC's communications, an update on United States consumer spending and President Donald Trump's press conference at 10:20 a.m. ET on the sidelines of the G7 Summit, noted the bank.

At that presser, Trump has pledged to discuss more about the memorandum of understanding (MoU) with Iran that so far hasn't been detailed. Trump noted earlier Wednesday that the MoU isn't finalized, batted away some of the rumoured content, and said that if he doesn't like what he sees, then the U.S. will strike Iran again, pointed out Scotiabank.

This is a problem of his own making as there is no available text, added the bank.

Scotiabank also added that Iran is claiming that the deal includes a requirement for Israel to withdraw from Lebanon, which the bank considers almost impossible to happen.

So, at the time of writing the note, Scotiabank is staring at oil prices moving a few dimes higher, slight strength in the US dollar (USD) against multiple crosses except the yen (JPY) and Swiss franc (CHF), and small gains in most equity benchmarks.

Rates curves are performing rather blandly except for outperformance in gilts after the consumer price index data and Sweden's curve after the Riksbank's policy statement.

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