Was the illiquidity of the August market unmasked on Wednesday?
Or is the bond market signalling more doom and gloom to come?

I think Asia traders are a bit shell-shocked by the extent of the carnage overnight and not sure what to do with themselves today. However, trade volumes speak louder than words and those volumes are screaming Bear.
Of course waking up to a sea of carnage while trying to formulate a day trading strategy, on paper no less, can be challenging at the best of times and while tempting to throw all caution to the wind and start selling the works, it's probably wiser to think this out a more quantified manner.
While the markets remain in full out bear mode, a good argument could be made about the markets irrational behaviour when it comes to trading trade war risk and by proxy global growth sentiment. Indeed, throughout this trade war malaise investor continue to wear the emotional attachment on their sleeves.

Hoping for the best on the policy front but positioning for the worst on the economic backdrop seems to be the flavour of the day. 
Surely the world's central bankers are not going to allow President Trump tariff threats to snatch defeat from the jaws of victory Not yet, anyway. Not while there's still some monetary firepower left in their arsenal 
The Fed, now out of necessity alone will need to adjust policy much more profoundly than they expected. While the threat of addition tariffs will make Beijing more accommodative to easing as policymakers have numerous avenues and a high degree for flexibility to respond. Suggesting that mainland's accommodative policies including infrastructure, fiscal and monetary measures will be aggressively dialled up in coming months
Even as trade tension alternate between simmer and boil. A Pboc and Fed policy deluge could go a long way to establishing risk sentiment.

Vanguard Market Pte Ltd provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.

Opinions are the authors — not necessarily Vanguard Markets Pte Ltd or its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD falls off the highs amid trade wars, weak German figures

EUR/USD is falling toward 1.1100. The German IFO Business Climate dropped to 94.3 points, below expectations. Markets are concerned by the intensifying US-Sino trade wars.


GBP/USD consolidates amid Brexit uncertainty

GBP/USD is trading below 1.2300, consolidating its gains. The UK and the EU have been blaming each other for a potential no-deal Brexit. US-Sino tensions are in play as well.


USD/JPY recovers farther from multi-year lows on Trump’s positive trade-related comments

The incoming positive trade-related comments dented the JPY’s safe-haven demand. Improving global risk sentiment helped the pair to recover around 150-pips intraday. Investors now look forward to the US durable goods orders data for a fresh impetus.


Forex Today: Trade wars paint markets in red, Brexit looks worse, and central banks are limited

Here is what you need to know on Monday, August 26th: The US-Sino trade war is painting global markets in the red. The US dollar is losing some ground to major currencies as yields plunge, while it gains against commodity currencies. Gold is rising and oil is falling.

Read more

Gold retreats from multi-year tops, fills weekly bullish gap on positive trade headlines

Gold extended its intraday pullback from fresh multi-year tops and dropped to fresh session lows in the last hour, filling the weekly bullish gap. The US-China trade tensions escalated further.

Gold News