APAC session

Risk assets may be on the rise, but it is more due to a pause in risk off as opposed to buyers rushing back in. Still, it could still allow for some bullish wriggle room on AUD/USD and bitcoin if sentiment allows.

It’s been a tough period for the S&P 500 and Nasdaq 100. But substantial moves in one direction rarely last long, especially when they occur quickly. With bulls successfully defending Monday’s lows despite significant selling pressure, and with price signals hinting we may have seen a near-term bottom, long setups may be worth pondering.

US interest rate expectations are becoming increasingly influential on Japan’s Nikkei 225, both through the FX channel impacting forecasts for exporter earnings and sentiment towards the outlook for global economic growth. Other factors, such as commentary from BOJ, come across as secondary factors for now.

Shinichi Uchida, Deputy Governor of the Bank of Japan (BOJ), says the bank won’t hike interest rates when markets are unstable, delivering a clear message on what traders need to do to prevent them doing so again: create volatility.

New Zealand’s jobs report beat across the board in the June quarter with unemployment undershooting forecasts while wages growth, employment, participation and wages growth topped expectations. However, the details were not as impressive, keeping the prospect of an August rate cut from the Reserve Bank of New Zealand in play.

With USD/JPY holding above key support after the daily RSI reached its most oversold level since 1996, the 1-hour bull flag could tempt bulls. The ASX 200 also shows the potential for another leg higher, even if small.

The Reserve Bank of Australia (RBA) refrained from delivering a dovish shift following its August monetary policy decision, acknowledging that while the economic outlook remains highly uncertain, inflation remains above target and is proving persistent. It's still refusing to rule anything in or out.

Market reactions over the past 24 hours have been well covered. But the VIX is worthy of a closer look, given it just posted its strongest single-day rally on record.

It looks like the United States may be entering recession. For EUR/USD traders, whether incoming data solidifies or weakens that view will likely determine how the pair performs this week. The tone will be set early with the most important piece of information arriving Monday.

It has been another volatile week for traders thanks to weaker US economic data, a dovish Fed and a refreshingly hawkish Bank of Japan. ISM services is a key event from the US next week, but apart from that it is mainly second-tier data from the APAC region. And that means appetite for risk might be the main driver for markets next week. But given the larger moves already seen, we may need to lower out expectations for volatility unless a fresh catalyst arrives.

Thursday’s Wall Street selloff has been fully embraced by the Nikkei in today’s Asian session, which sank to a 5-month low due to risk-off trade and a stronger yen.

A weak ISM manufacturing report a day after a dovish Fed meeting (and on the eve of NFP) was just the ticket for risk off on Wall Street. GBP traders ignored the BOE's cautious stance on rate cuts.

Risk appetite made a swift comeback when the Fed opened the door to beginning their rate-cut cycle in September. The question is whether Wall Street indices, gold or WTI crude can extend their gains.

Wednesday was a day of divergent policies that saw the Bank of Japan (BOJ) hike rates more than expected and the Fed signal a cut. And that saw the US dollar and yen broadly move their separate ways.

AUD/USD is under pressure while ASX 200 SPI futures are flying following Australia’s Q2 consumer price inflation report, reflecting surprisingly modest underlying inflationary pressures that all but extinguish the risk of another RBA rate hike this cycle.

This time tomorrow we will have the conclusion of the highly anticipated BOJ and FOMC meetings, with a clearer idea of whether the RBA will be forced into action after today’s quarterly inflation report.

Chinese markets are performing poorly despite policymakers cutting key policy interest rates last week. It’s been that way since the conclusion of the Third Plenum earlier this month, an event that delivered little in the way of concrete measures to help appease concerns about the trajectory for the economy.