Daily thread to exchange ideas and to share your thoughts
Good day, everyone! Hope you're doing well as we get things going here on the session. It's been a lively start to the day once again as markets go for a bumpy ride amid the flip-flop in risk sentiment seen earlier today.
The US called China a currency manipulator (finally) before the PBOC took action to help stabilise the currency's sharp decline since overnight trading. That saw risk assets fall on the initial headline before rising after the Chinese central bank's actions.
The yen is the major mover on the change in sentiment with USD/JPY rising by 150 pips from 105.52 to 107.09 before settling around 106.50 currently.
I reckon the latest moves provide markets with a decent "reset" but the fact remains that dark clouds continue to preside over US-China trade tensions and we are likely to only see things escalate further from hereon.
As such, don't take today's message as one being that China isn't going to allow its currency to weaken but more that they are going to take more measured means in fighting back against the US on the trade front.
I still see markets eventually having the need to be more defensively positioned but at the same time, expect this kind of back and forth volatility to manifest in the coming weeks.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
