Asia wrap: No obvious macro catalysts to steer the bus

Stephen Innes SPI Asset Management

Asian markets are navigating through relatively calm waters this week, but there are growing concerns among traders about the looming economic challenges, which could potentially deflate the recent rally balloons.

APAC markets have mostly declined at mid-day, reflecting cautious sentiments following a yawning close in the US.

5200 is a big psychological number on the S&P 500 so traders will need some convincing from earnings or Goldilocks to take that next giant leap of faith.

Profit-taking and position-trimming ahead of next week's impending inflation data may also be contributing to the subdued market mood. Yeah, I know it's only Wednesday, but with no obvious macro catalysts to steer the bus, the focus is moving to next week.

Meanwhile, US Treasuries continue their rally post the lacklustre April US jobs report, although the decline in the broad US dollar index has stabilized around the 105 level. The role of the Japanese yen (JPY) in influencing market dynamics remains the biggest point of interest. Just ask Yuan traders....

Looking ahead, the US data calendar remains relatively light, with initial jobless claims and the University of Michigan survey being the key focus. However, these releases may not provide a significant catalyst for the next directional move in the US dollar. So like stock pickers forex traders are already looking ahead to next week's inflation data, which could potentially shape the dollar's next directional move.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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