US-China trade headlines give risk assets a nudge higher to start the day

The headlines above are keeping risk assets more buoyed as we begin European trading as it continues to provide hopeful optimism to markets ahead of proposed trade talks between US and China later in October.

The aussie and kiwi are leading gains in the currencies space while the yen is on the back foot amid fimer sentiment in the equities space. Despite the optimism, the bond market isn't getting too carried away as it continues to keep a close watch on the ECB decision:

USGG10YR

Treasury yields are more flat as we begin European trading and the intra-day picture is one all traders can easily identify with. It shows a picture of lower highs and lower lows, indicating that bonds are still holding on to more cautious sentiment in trading today.

That has seen yen pairs pull back a little from the highs earlier as Treasuries aren't fully buying into the optimism in markets today amid a key risk event (ECB meeting) still to come.

As such, expect markets to reflect a more modest risk mood ahead of the ECB but at the same time, just be wary of more potential trade headlines to follow.

I would argue that on the balance of things, risk sentiment is still a little more buoyed but with a slight hint of caution in anticipation of the ECB meeting decision.