Another day, another drop in risk-sentiment. Asian equities tumbled again on the back of worse Chinese data and (perhaps) the hydrogen bomb tests done by none other than North Korea. Usd and Jpy continue to be bought, and the best looking pairs out there still seem to be GbpJpy/CadJpy/GbpUsd shorts and UsdCad longs. I will personally wait for UK services PMI this morning, before tackling the Gbp. Following the unexpected weakening in the UK manufacturing PMI earlier this week, the UK services PMI is expected to soften.
Fed Minutes come into focus today and what the market will be looking for are hints on the "pace" of tightening. The risk? That the Fed’s definition of gradual is faster than the market’s 55 bps per year over the next two years, which could make March more ‘live’ than is currently priced in. Also watch the ADP report (consensus 195K; close to the 200K expectation for payrolls) and ISM Non-Manuf (exp. 56 vs 55.9 prior).
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