Asian equities could trade mixed as traders see a more constructive tone in the global banking sector in which regional banks in the US saw some reprieve on hopes that the FDIC’s deposit insurance amount could be lifted. The participants’ sentiment is better as the advance on the UBS takeover of Credit Suisse helped limit contagion fears and supported risk. Thinner liquidity could affect price action due to the holiday closure in Japan.
Traders are eyeing any potential peace talks discussions between Russia and Ukraine as Russian President Putin said he has looked at China’s proposal for the resolution of the Ukrainian conflict and will discuss this proposal. Any positive outcome will boost risk assets globally. On the macro front, attention turns to tomorrow’s FOMC decision, with many desks now calling for a Fed hold rates hike this week. However, markets are currently tilting the money market pricing for a 25-bps hike. Hedging and positioning activity before the key risk event of the week could weigh in the short-term price action, so it is worth keeping a close eye on the USD and US short-term interest rate curves.
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