Cats and Dogs
Talks underway.
However, it feels more like the first round of a boxing match than the first day of constructive talks.
Running into the talks we have had the NBA bans, companies blacklisted, Visa bans and a night of conflicting headlines.
So, with the mood tense, be prepared for a breakdown in trade talks and quick changes in risk sentiment on changing headlines:
- When the risk tone is on with optimism about talks: Expect AUD, NZD strength and JPY/CHF weakness.
- When the risk tone is off with pessimism about talks: Expect AUD, NZD weakness and JPY/CHF strength.
Traders will use the USDJPY and AUDJPY as 'go to' pairs for trading risk sentiment. So, my plan is to go with the short term flow of these moving headlines until we get some clarity.
