The Song Remains the Same
Trade war jitters continued to litter the landscape after reports surfaced that Chinese and U.S. officials are struggling to agree on the schedule for a planned meeting this month. If they're struggling to decide simple itinerary, expectations for anything tangible to arise from the trade talks are looking incredibly dim at this point.
The RBA and the AUS
The RBA has tempered their policy language, saying they will ease policy if needed. The markets are however fully pricing in a cut before year-end, and possibly even during the next meeting depending on trade war developments, A minor short squeeze has unfolded, and with the markets especially bearish it won't take much to trigger a more aggressive squeeze. So far traders have been leaning into the post-RBA Australian dollar rally as the market still wants to own US dollars from a growth differential perspective.
Japanese Yen
Adding to the growing list of reason to own Yen, more talk that Japanese lifers are increasing their currency hedges suggesting that USD/JPY rallies will be limited.
The Yuan
USD/CNH retraced from the New York high as the market turned profit-taking mode ahead of 7.20 level. Misplaced or not there's some thought that the Pboc many want to aggressively defend this fearing a break could trigger a test of psychological 7.25 level which could prompt waves of capital outflows.
The Malaysian Ringgit
Overall the song remains the for USDAsia turning bid on any hint of trade war escalation. With that in mind, Ringgit sentiment will continue to be held hostage by external concerns, particularly the weaker Yuan
The Singapore Dollar
Yet another casualty of a trade war and the weaker Yuan
SGD NEER remains under pressure as USD traded better bid across Asia.
USD/SGD is now trading at the year-high as the short SGD view continues to pay dividends as trade tensions rise
Indian Rupee
USD/INR opened at 72.00/72.05 and continued to push higher and eyeing 7.25 on follow-through from India's lower-than-expected GDP. Both the Nifty and Sensex trading down 1.25 % as general trade war unease continues to grip Asian markets
Gold
Gold has remained resilient in the face of the stronger dollar however given this week's economic calendar is jam-packed with crucial economic releases that will shape monetary policy expectations for the September 18 FOMC meeting, gold traders are trading very delicately waiting for more convincing US economic signals.
Oil
Oil remains susceptible to hurricane demand destruction, which is compounding the negative vibe from the trade war malaise.
However, when it comes to trading Hurricane risk at the end of the day, you can't compete with Mother Nature which should be enough to keep trader leaning into any short-term rally, that is if the weather and landfall reports hold.