Investors are biding time while waiting for the next Federal Reserve monetary policy signal

Investors are doing little more than biding time today while waiting for the next Federal Reserve monetary policy signal, but risk sentiment is alive and well albeit a bit more sombre today

Singapore

Singapore non-oil exports fell for a fourth consecutive month in June.  Which continues to drive home the sluggish global growth environment but also suggest traders will favour remaining long USDSGD short SGD NEER as the markets position for a test of 1.3650

Asia Equity markets

Investors sentiment has been dulled today by thoughts of a less dovish Fed response in the wake of the positive US economic news flows. While traders see the Federal Reserve interest rate cut this month as a lock. The strength of the  July data could be enough to dim the hopes for subsequent easing.  Unfortunately for investors, the Fed easing narrative is going to get ping-ponged around endlessly for the rest of 2019.

But the persistent downside risk for global growth beckons both the Fed and Pboc to step up stimulus. While the Fed measure is to ensure US economic momentum remains on an upward slope, the Pboc efforts are to shore up domestic demand after a significant consumption wobble in Q2. 

As far as the strong start to the month for US economic data, we need to remind ourselves the Fed's easing bias is predicated on uncertainty, slowing global growth, and weak inflation impulse and that the  US consumer behaviour is not a central input in its new global risk management model.

Oil prices

Oil prices are trading flat as market participants attempt to make sense out of confusing signals from the White House. Mind you, this type of mixed signalling is commonplace when it comes to this administration.

On the one hand, Iran is reportedly willing to come back into full compliance on the nuclear pact if they can sell oil again but denying they are ready to negotiate over the ballistic missile program.  

The fact that negotiations have gone on at all does significantly lessen the chances for a worse case escalation scenario.

So, traders are cautiously looking first before jumping into full  " bearish "mode as positive price catalysts remain far and few this morning.