Top News and Analysis

USD/CNH: Animal spirits are in control of China’s equities

China equities & its proxies are resilient against a lacklustre macro environment. Sentiment-driven animal spirits are playing a key role in the recent rebound of China equities. USD/CNH (part of the sentiment-driven factor) has flashed exhaustion conditions after failing to break above the key 200-day moving average. The past four days of performances seen in the China stock market and its proxies seem to be more driven by animal spirits rather than fundamentals. Let’s discuss a bit about th

05-05-2023 02:00 GMT by Kelvin Wong

Asian stock markets rejoiced post-FOMC

US stock indices spooked by Fed Chair Powell’s “hawkish” comments. USD sold off while safe haven currencies, JPY & CHF in demand. Asian stock market outperformed while Hong Kong indices rebounded from the key 200-day moving average. No surprise from the US central bank, Federal Reserve’s policy meeting outcome yesterday where the Fed hiked its policy Fed funds rate by 25 basis points as expected, its 10th hike in this current tightening cycle to a target range of 5% to 5.25%. Most importantly,

04-05-2023 02:01 GMT by Kelvin Wong

USD/JPY: Will BoJ throw in a shock surprise?

JGB futures implied volatility has ticked lower. Tokyo core inflationary data for April has continued to accelerate, above BoJ’s target for 11 consecutive months. USD/JPY is testing key short-term range support at 133.20.

27-04-2023 23:52 GMT by Kelvin Wong

JPY carry trade: Downside pressure mounts as global demand faces headwinds

Commodities and growth proxies JPY crosses are leading the decline in G10 JPY carry trade basket. A widening of the US high-yield corporate bonds credit spread may spark a higher volatile movement in the JPY crosses. Key US earnings releases from Visa, Microsoft, and Alphabet are indicating slower global demand spending despite expectations beat. FX volatility may start to increase as G10 JPY crosses have shaped significant reversal movements Fig 1: G10 JPY crosses 1-month rolling performanc

26-04-2023 01:11 GMT by Kelvin Wong

US Russell 2000: At risk of downturn from credit crunch

US banking systemic risk has toned down in the last two weeks. US corporate credit crunch risk is still a live event. A widening of the US high-yield corporate bonds credit spread may trigger a downturn in US small-cap equities (Russell 2000). A month has passed since the mini risk-off episode that shook the international financial markets triggered by the turmoil seen in the US regional banks due to the mismanagement of duration risk on their respective balance sheets. So far, any outburst of

25-04-2023 01:34 GMT by Kelvin Wong

Lack of further liquidity and investors’ positioning put a dent in China’s stock market optimism

Cyclical sectors have underperformed, and Real Estate is the worst. No clear signs to indicate the resurgence of a major bearish trend. China A50 is at risk of further downside pressure to retest key support at 12,300. China’s stock market has started to show signs of fatigue after a magnificent three-month rally of 22% from the October 2022 low to January 2023 high as seen on its benchmark CSI 300 Index. Since 18 April 2023, it has declined by close to -4% and underperformed a basket of develo

24-04-2023 01:55 GMT by Kelvin Wong

AUD/USD short-term uptrend intact supported by China’s growth spurt

China’s Q1 GDP growth, retail sales, and industrial production continue to expand. Less aggressive monetary policy easing is needed from China’s central bank PBoC. AUD/USD short-term uptrend remains intact above 0.6645 key support. The growth spurt from China reopening from its abandonment of stringent COVID-zero policy and implementation of stimulative policies late last year have continued to bear fruition. Today’s release of key China data indicates a robust internal economic environment cou

18-04-2023 02:33 GMT by Kelvin Wong

A rebound in inflationary expectations may act as a headwind for US tech equities

An increase in expectations for a fresh Fed funds rate cut cycle to start as early as July this year has benefitted US tech equities. Forward-looking inflationary expectations in the US have ticked up but seem under-priced. Recent up move in Nasdaq 100 has started to involve into a potential bearish reversal configuration. The recent turmoil in the regional US banking sector has triggered a credit crunch in the US economy, reinforcing the shrinkage of aggregate demand that increases the odds o

16-04-2023 21:48 GMT by Kelvin Wong