Asia markets adrift awaiting central banks

Risk-on atmosphere prevails

Wall Street had concluded the Tuesday session little changed, with the comprehensive S&P 500 index still finding the cyclical-defensive divide shining through. The energy, industrials and materials sectors notably led gains, reflecting the risk-on atmosphere prevailing in North American markets. This was despite the mixed signals coming through from the July JOLTS report whereby jobs opening were shown to have declined more than the consensus to 7.22 million, a new 5-month low to continue the downtrend. Hiring, however, were reported to be resilient, in line with the labour market updates from last week. In turn, the US dollar index held largely steady with little so much of a whisker of movement. As for the S&P 500 index, the near-neutral movement find prices still eyeing the 3000 level.

One piece of news that was seen to move prices amid the stale environment had been President Donald Trump’s firing of his national security adviser John Bolton. Brent crude prices notably edged lower on the announcement given the hard-line stance from the former security adviser particularly on topics such as in relation to Iran. The reversal of these gains into Asia hours, however, had numbed any impact on commodity currencies among others. That being said, the short-term uptrend for crude oil prices will be one to watch with the OPEC monthly meeting and also the Joint Ministerial Monitoring Committee (JMMC) thereafter. As it is, the driver for crude oil prices remains one of a demand story and further upsides may require the likes of sustained improvement in geopolitical issues.

Source: IG Charts

USD/JPY at six-week high

While the FX market remains broadly little moved going into the Wednesday session, USD/JPY (大口） had been one to continue reflecting the improvement in market sentiment. Moving up to a six-week high, USD/JPY was last seen oscillating at $107.50 levels, departing from the earlier downtrend. Built on the back of the recent spate of turns in geopolitical sentiment, this had seen to the short-term rally likewise for this currency pair. While the hopes for upcoming support for the market from central banks including the likes of the ECB and Bank of Japan itself continue to carry USD/JPY prices, it would nevertheless warrant some caution considering the potential for sharp reversals should there be any disappointments coming up. The volatility with this pair remains.

Source: IG Charts

Yesterday: S&P 500 +0.03%; DJIA +0.28%; DAX +0.35%; FTSE +0.44%