Asia wrap: Trade talks stall while Brexit impasse is showing few signs of abating anytime soon
|Asia Wrap
Softer US equities overnight on the back of mixed US earnings reports, renewed trade woes with President Trump saying talks with China had stalled, and UST yields continuing to soften kept weighing on USDJPY throughout the session
In Asia, the Nikkei sold off about 2% from the open following weaker risk, and USDJPY broke initial support at 107.80, trading down to 107.64. Traders will turn to the US fixed income and equity risk sentiment for the clues However after the lunch break and with both Tokyo and Singapore desks setting a better bid on profit-taking, it could be a bit of a slog for the next few hours.
SHCOMP closes lower by 1 %
Local currency markets
On local currency markets with the Bank of Korea out of the way and the Won no worse for wear, traders are waiting for Bank of Indonesia, but Gov Warjiyo is waxing dovish in the pre-rate decision commentary it supports the markets forgone conclusions.
The dovish Fed has been welcomed with open arms by regional central banks as it offers them considerable policy wiggle room without negative currency consequences.
Brexit Watch
The Brexit impasse is showing few signs of abating anytime soon. In a BBC interview, the EU's chief Brexit negotiator Michel Barnier restated the only way for the UK to leave the EU in a business-like manner.
But with both Conservative party leadership contenders hardening their stance on the rejection of the Irish backstop it appears things are about to turn anything but orderly on the Brexit landscape.
The House of Lords, meanwhile, has backed a move to prevent the next PM from proroguing parliament to force through a 'no deal' Brexit, amid speculation of further MP resignations in protest of the threat.
Honestly, I'm finding it difficult to find a trader is not biased to sell Pounds given the political uncertainty is high while y the markets remain underhedged of a no-deal Brexit. out the session
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