 Risk aversion eased mildly today as markets respond positive to US decision to delay the sanctions of Huawei for 90 days. After some initial hesitation, Yen sell-off is picking up momentum in early US session, because of rally in stocks and treasury yields. On the other hand, Sterling is recovering mildly, as traders takes profit on short positions. UK Prime Minister Theresa May is set to scheduled to announce her new Brexit deal at 1500GMT. For now, we'd view the above moves as temporary. Firstly, the move by US Commerce Department was mainly for housekeeping purpose only. That is, it's for preventing sudden disruptions on the internet, telecom on the US side. It's by no means an end to US-China trade tension. More importantly, given the hard line rhetorics from both sides, we're not seeing any chance of a deal in that 90 days window. Secondly, May has repeated history of delivering nothing special on Brexit. Pound could be back under pressure should May disappoint again. The more sustainable underlying move is in Australian Dollar. RBA Governor Philip Lowe was clear in his speech that they're going to considering cutting interest rate in June meeting. Even if RBA chooses to wait again in June, it looks inevitable that they'll still deliver the rate cut in August. The uncertainty lies only in timing. Aussie will likely stay pressured ahead. In the currency markets, Aussie is rightly below the weakest one for today so far. Yen follows as second weakest, then New Zealand dollar. Canadian Dollar is the strongest one, followed by Sterling, and then Dollar. Technically, 55 day EMA at 110.84 is a key level to watch in USD/JPY. As long as it holds, further decline is expected and Yen will likely resume recent broad based rise sooner or later. Though sustained break would probably pull other Yen crosses higher together. In Europe, currently, FTSE is up 0.54%. DAX is up 1.07%. CAC is up 0.61%. German 10-year yield is up strongly by 0.0176 at -0.066. Earlier in Asia, Nikkei dropped -0.14%. Hong Kong HSI dropped -0.47%. China Shanghai SSE rose 1.23% to 2905.97. Singapore Strait Times dropped -0.69%. Japan 10-year JGB yield rose 0.0027 to -0.045. |
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