Investor attention turns now to US and UK economic data today that will set the tone for monetary policy.

The US and China agreed to another 90 days to hammer out a trade deal, staving off triple-digit duties on each other’s goods and removing some uncertainty, although markets broadly expected the move.

Australian stocks stayed near a record high hit earlier in the day while the Aussie eased as traders digested the widely expected 25-basis-point rate cut from the Reserve Bank of Australia.

Less than a week after a divided Bank of England (BoE) cut interest rates, investors will get a fresh view of the state of the UK labour market with British pay growth in July expected to stay steady at 5%.

Yesterday’s data showed hiring intentions by British businesses fell to their weakest since the Covid-19 pandemic and recruiters said starting pay was rising at the slowest pace in over four years.

Four of nine BoE policymakers opposed its quarter-point interest rate cut to 4% last week and they are likely to need further convincing that domestic inflation pressures are easing.

Traders are no longer pricing in another rate cut this year.

That possibly leaves sterling on firmer footing, but with British growth and its economy still a concern and the pound already up over 7% this year, speculators have ramped up their bearish positions on the currency.

Weekly data from the US commodity futures trading commission shows speculators have short positions on the pound to the tune of US$2.78 billion, a swift turnaround from the bullish positioning that had prevailed since February.

The US inflation report later today will also be key, as investors parse through the data to better understand the impact of Trump’s tariffs and how that influences the Federal Reserve’s rate cut path.

Key developments that could influence markets today include economic events such as UK labour and wage data for June and Germany ZEW economic sentiment for August.