Asia market update : riding the risk roller coaster

The markets remain incredibly fragile. The negative equities view isn’t just affecting a sector or two, but it’s across the board as large-cap stocks are wobbling on the toxic combination of higher US yields and risk aversion, which has equity investors running for cover. But none the less,  a very confusing landscape to start the week as the risk parameters have been up and down like a rollercoaster this morning.

An early reprieve from Chinas RRR cut has given way to the reality check that US Treasury yields are on the move higher again.

USDCNH somewhat muted reaction to the RRR cut is a result of Vols remaining in check as the Pboc has done an excellent job taming that beast lately. With around 38-40 % probability of USDCNH touching 7.00 in the next month, local traders look comfortable in selling upticks in the absence of any repricing on the options curve. Also, the lingering fears of Pboc intervention on and aggressive RMB sell-off are holding the raging USD bulls back on that front.

Oil markets remain pressured by Iran waivers and Opec supply. Headline headwinds blustery but the fear of the crowded trade mentality could see emotion prevail over logic. Markets in a bit of flux with risk aversion and the stronger USD weighing on sentiment.

Gold is heading lower on higher US yield, but in the meantime, it’s holding above the critical $1195 support

OANDA Trading podcast Oct 8 with BFM 89.9 Kuala Lumpur, VIX in the mix

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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