By Giles Coghlan, Chief Currency Analyst at HYCM
Risk on trades stalled yesterday on the concerns that the US will not roll back September tariffs it placed on China. If this is the case then this might cause China to walk back from signing phase 1 of the deal. Hence the risk rally has stalled.
So, here is what to look for risk markets today:
- If we get news that the US is going to roll back the tariffs then risk is firmly back on. In that scenario expect immediate AUDJPY buyers from market.
- If we get news that the US will not roll back the tariffs then risk is firmly off. In that scenario expect immediate AUDJPY sellers from market.
- If we get news that the Us-China trade deal is ‘cancelled’ rather than just delayed then risk will be firmly off and expect immediate AUDJPY sellers.