Asia Wrap: Gold glitters while the bulk of Asia FX flows post-FOMC continues to be unwinding risk-off positions
|Comex gold flow has turned balanced after the fear of missing out on $1400 triggered a massive wave of buying earlier in Asia. Now the futures market is balancing out with a subtle axe towards profit taking.
So, after a pause to better quantify the current rate curve pricing and to fully digest the headline that Iran Revolutionary Guard shot down a US drone amid building middle east tension.
The markets still think the odds of a US military escalation is unlikely although the longer this war mongering continues that probably will shift.
So, the debate moves on to the likely hood of a FED 50 bp cut in July, which means the markets will move into in data-dependent mode readying to pounce on the next dovish economic signal.
Currency Markets
The bulk of the flow post-FOMC continues to be unwinding risk-off positions.
Yuan
I always remind myself these days to never to look a gift horse in the mouth. Thanks to even more dovish repricing along US yield curve that's blending sweetly with the lingering risk euphoria from the rescheduled d Trump -Xi meeting, the USDCNH hit 6.85 much quicker than even our most optimistic expectations were.
Philippines Peso
BSP left its overnight rate at 4.50%, as they think inflation risk look balanced, so we had a quick diver lower to USDPHP 51 55 where the Peso continues trading favourably while now catching a ride on the coattails of improving Yuan sentiment.
The Rest of the bunch
Also trade risk-correlated currencies like the SGD, TWD, MYR, KRW and of course the AUD. in the G-10 space rode on the coattails of the stronger Yuan as the market continues to dump the buck in Asia.
G-10
The Euro
After today's USD sell off the Euro positioning should be a bit cleaner, and the market could start to test the Euro downside gingerly as growth outside the US markets will still hold the key for the USD's short to medium term outlook.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.