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It is all about the risk-on mood as we look towards European trading, with risk assets surging ahead buoyed by the surge in Chinese stocks as investors continue with the more bullish mood from the end of last week.
As such, the dollar and yen are notably on the back foot as we see other major currencies keep modest gains going into the session ahead.
The China "bull market" narrative is a key factor driving the moves today and while this story could still play out for a while yet, there is room for skepticism still.
The obvious one being can China stocks ignore the more pessimistic developments elsewhere around the world - especially if the virus situation gets worse and worse?
2015 may seem like a distant past but let's not forget how all that "bull market" exuberance ended up for Chinese investors. For some context, the CSI 300 fell by ~45% in a little over 2 months after the surging rally that began in late 2014.
The difference now is that can excess liquidity and strong local intervention help spare investors the tears if we are to see another major correction? That remains to be seen.
As for the risk-on mood today, I reckon that can keep pace since we are to see "lower" virus figures out of the US since it is a Monday (the weekend effect at play).
The S&P 500 possibly searching for a break to its highest levels in almost four weeks will also be interesting, especially if price clears the 3,153 to 3,155 daily resistance region.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
