Asian equities could trade mixed after US equities traded volatile in a session where markets repriced once again a dovish Fed. Desks were also bringing a ‘soft landing’ to the talk, which could support risk equities if the theme becomes the main one in the coming weeks.
On the macro front, with policy repricing happening, the US yield curve and the USD repricing could support other governments’ bonds, and the FX could be one of the key beneficiaries. Lower yield differentials and a weaker dollar could drive capital flows to cyclical countries like China. It is worth noting risk assets enjoyed a bid on the back of China reopening optimism. The main key event that could boost risk assets is the US Consumer Price Index on Thursday. If the data shows a slowing inflation print, another dovish wave may hit the markets and support risk assets such as equities as recession fears could ease whilst traders price a dovish Fed. Before that, there is a potential volatility event, as Fed Chair Powell will speak later today.
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© 2019 High Leverage FX - All Rights Reserved.