Asian shares hovered near 1-1/2 week highs, helped by expectations monetary policy will remain accommodative the world over, while COVID-19 vaccine rollouts help ease fears of another dangerous wave of coronavirus infections.
A mixed start to the week for European equities from a sector perspective as US earnings activity heats up this week and could be holding the market back a touch.
Nevertheless, the pandemic still impacts demand with Europe and important emerging markets—India and Brazil—are significantly affected.
Slow but continued progress appears to be being made in Vienna in talks with Iran seeking to reinstate the nuclear deal, which would see more Iranian crude coming back to the market. Simultaneously, activity continues to rise in the US onshore with both rig and frac spread counts up again.
The move lower in US rates could mean the recent positive USD momentum is under threat, and it looks very much like a textbook case for U.S. dollar weakness as the pieces are slowly falling into place for a dollar selling trend to resume. A deteriorating U.S. trade deficit, a retracement in Fed pricing, a significant upturn in European vaccination rates and upcoming growth acceleration support the view.
Given the solid beta to a batch of historical moves lower in the USD and positioning basis over the past year, both the SGD and KRW should be in demand, given their highest beta to USD downside and low relative positioning. The combination of very low equity positioning in Korea amidst a strong export upturn as the world reopens should make it the Won the market darling.
But hedging dividend payments from large tech in Korea are likely holding the Won back.
With rates volatility falling like a stone as the Fed's pricing is completely off the boil, and the dollar looking posed to weaken further, gold has been back in demand from both paper and physical markets where Asia is now running with the golden baton. With China permitting domestic and international banks to import large amounts of gold into the country, five sources familiar with the matter said, potentially helping to support gold prices after a months-long decline, Reuters reports. China is the world's biggest gold consumer.