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The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals & inter-market. Feel free to follow Ivan on Twitter & Youtube. Make sure you join our discord room if you’d like to interact with our team. Also, find out why Global Prime is the highest rated broker at Forex Peace Army.
Safe-haven bids into the allure of the Japanese Yen and fixed income markets are the name of the game as the markets gradually come to the realization that the global economy is about to enter a period of subpar growth as the US and China drag on the trade strifes. The behavior of risk-sensitive assets is finally revealing that the market is buying into the notion of a protracted trade war with no end in sight, and as such, leveraged-seeking strategies are on deleverage mode. The USD received a better bid tone as US consumer confidence held firm, while the Aussie also found significant interest even as Aussie yields in the 10y maturity fall below the official cash rate of 1.5%, which communicates the market is overly confident that the RBA will cut its benchmark rate in June. The Canadian Dollar has been the most unloved currency as the market prepares to adjust the currency valuation based on today’s BoC policy meeting. Lastly, the Euro has traded on a softer note as the fragmented EU parliamentary election results feed through and Italy makes headlines once again for the wrong reasons. The Pound is finding a better footing so far as traders await the transition away from PM May at the helm of the UK govement starting next week, a period where GBP vol will be subject to which candidate is ahead on the bookies.
* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.
The deleveraging scene keeps on worsening, with the music we can hear in the trade negotiations far from soothing the nerves from a market that is increasingly in disbelief of a trade deal any time soon. In other words, it looks as though the market is behaving as if the US and China have gone past the point of no retu, and as such, Mr. Market is unwinding with asperity risky bets. Instead, flows are heading back into the safety allure of bonds as equities take a hit. The S&P 500, as our global guidance to take the lead in equities, has been hammered again after an impulsive sell-off, while the technical picture in US yields is the darkest it’s been as the US30y loses the 2.7% handle. Note, the market’s exasperation can also be reflected in the further inversion of the 3m/10y yield, a clear waing sign that the market is pricing in a severe slowdown domestically. The resurrection of the DXY, alongside another episode of runaway strength in the Yen index, tops the risk off dynamics. By expanding the view into the wider spectrum of the RORO model, we can clearly observe a grim outlook maintained in Chinese assets as well as the VIX and junk bonds.
EUR/USD: Sellers Achieve Break of Hourly Structure
GBP/USD: Enters A Range As Selling Vol Pressure Builds Up
AUD/USD: Consolidation With Trappy Edges Eyed
USD/JPY: Risk-Off Environment Keeps Downside Risks Intact