Equity Markets
This morning I alluded to the markets being weighted down by the uncertainty of what door to walk through. Door number 1: The dovish Fed- Door number 2: Trade war uncertainty -Door number 3: Middle east escalation. I should have added door number 4, which is to take a decidedly wait and see approach given that out the outcome from G-20 Presidents Trump and Xi meeting is arguably the biggest game changer when it comes to the near-term outlook for risky assets.
Currency Markets
Yuan
China expressed, over the weekend, a stricter stance over President Xi's upcoming meeting with US President Trump And while we continue to remain on a heightened state of currency awareness around all things Yuan, there has been little change in Pboc fixing so we look for the USD/CNY to consolidate within the 6.85-88 level over the next few days.
MYR
Positive news flows about Malaysia reviving large projects has triggered a strong rally on the KLCI and has also been supportive of the Ringgit from a capital inflow perspective.
Across the board, weakness on the USD is helping sentiment as are firming oil prices.
But from a tactical position, there could be more long USD position heading for the exit on what appears to be the early stages of a long USD unwind.
Gold
Gold traded up to $1410.40 from $1401 at the Comex open but quickly reversed as Liquidity was sparse to non-existent so price action could have been a touch exaggerated t. But the picture cleared as liquidity picked up when the SGE and TOMCOM opened, but similarly to Friday's move above $1411, today's move was quickly beaten back in the next few minutes suggesting there's a lot of inventory from both futures and options player which will present both a significant obstacle and target.
Oil markets
The market remains supported by the escalation in Iran tensions and how Iran will respond to the US sanctions. And as this headline waiting game plays out, the market remains focused on the two main events which will likely plot the course of oil prices in H2 One will take place in Japan, the other in Austria.
G-20 is turning into a high stakes poker game for risk and if the sideline talks between Trump and Xi fail and triggering an escalation in tariffs the odds of a full-blown global recession increase exponentially
There a lot more certainty for the outcome in Vienna after the recent oil price plummet