In other words, greed is coming back into markets
Optimism is coming back or should I say greed is starting to return as markets come to terms with the US-China trade situation and that both sides are facing a stalemate which won’t be resolved any time soon.
As mentioned earlier today, at some point markets will start to turn towards the battle between greed and fear and we’re already getting a taste of that now with greed ironically, trumping over fear ahead of US trading.
That has seen USD/JPY push up to a high of 109.67 from around 109.40 levels at the start of the session, as US equity futures continue their recovery with E-minis now up by 0.4% after having been down by 0.4% earlier today:
US Treasury yields are also moving up with 10-year yields now up by 1.4 bps to 2.387%. That in turn is helping yen pairs push higher on the day.
Looking ahead, it’s still a matter of risk sentiment as market participants will continue to focus on that as the main theme in trading this week. Last year, we’ve seen time and time again the ability of markets to recover after continuous US-China trade setbacks and it looks like that theme is not yet a thing of the past if the early indications here are to go by.
However, watch out for more trade headlines in the session ahead. That will still play a role in determining how risk trades work out today.