The calm before the next storm?
Risk trades are faring better on the day after Evergrande/China fears overwhelmed trading sentiment yesterday. Just be wary though that Chinese markets are still closed today and a lack of a firm response by the PBOC or local authorities tomorrow could yet stir some pessimism as we navigate through the sessions ahead.
For now, there is some perceived calm with the Hang Seng index down just 0.3% while US futures are showing a modest bounce after the sharp fall overnight:
The S&P 500 is hanging on to its 100-day moving average so that is the key technical level to pay attention to in the context of trading this week.
Elsewhere, commodity currencies are recovering some ground as well following the drop yesterday with the dollar and yen holding slightly weaker on the day.
Of note, CAD/JPY is up 0.6% so far today to 85.83 and pushing back above the broken support level around 85.42. That said, sellers remain in near-term control as the key hourly moving averages are still quite a distance away at around 86.22-51. That will offer some resistance to buyers' resolve over the next few sessions.
