Daily thread to exchange ideas and to share your thoughts
Good day, everyone! Hope you're all doing well as we get things going here on the session. It's been a quiet start to proceedings so far with risk in a much calmer mood to start the day.
The PBOC fixed the yuan weaker above 7.00 per dollar - the first time in a decade - but it was not as weak as many had expected, thus allowing the yuan to strengthen slightly and markets to find some stability today.
As such, risk assets are faring better alongside commodity currencies with the aussie leading gains in the currencies space. The dollar is a tad weaker but trading ranges are relatively narrow still for the time being.
Treasuries are still flip-flopping for the most part with yields falling off early on before recovering back to flat levels currently. That saw USD/JPY dip to a low of 106.03 before coming back up to 106.19 at the moment.
Markets are still very much in a state of flux as we're adjusting to a new norm. Central banks around the globe are set to ease policy more aggressively amid the risk outlook (rising trade tensions, weaker growth, slowing inflation) and with China allowing for a weaker yuan, expect this to evolve into some form of pseudo-currency war of sorts.
I reckon we'll struggle to find much direction from hereon until the end of the week so it's hard to justify a further push higher in gold and the yen for now.
Markets are trying to find the right balance between greed and fear so that's going to leave for a lot of push and pull in the mean time. So, if you're looking for directional trades, it's going to be a bit hard to come by in my view.
I reckon now it's all about chasing near-term moves before they readjust again. Hopefully there will be something more appetising for traders in the coming weeks.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
