Asian equities could trade under pressure amid a risk-off trade on Wall Street in the wake of solid ISM Services PMI data, where the headline was hotter than expected. Traders brought back the hawkish Fed playbook, where US bond yields rose, USD strengthened, and equities sold off. Going ahead, it is worth keeping a close eye on US data this week before the Fed decision on December 14th. Current market price action shows traders are still willing to place bets on a more aggressive Fed in the terminal rate.
On the macro front, some risk tailwinds could come from China as investors are back to take risks in local assets as reopening hopes supported the Yuan and commodities benchmarks such as Oil. Recent reports suggest that a major COVID-zero policy easing could be announced as soon as this Wednesday. For the session ahead, sentiment could improve if more cities loosen COVID restrictions as several municipalities accelerated the easing, including Shanghai and Shenzhen.
© 2019 High Leverage FX - All Rights Reserved.
© 2019 High Leverage FX - All Rights Reserved.