Risk Markets
The central bank and their policies are supporting risk at the start of the week after the Bank of Japan took the gloves off by raising their ceiling for buying corporate bonds.
It seems the more bearish Wall street gets, the more dovish central banks lean
Overnight news flows remained supportive for markets with most focus on the global economic progress to rise from the relaxing the stay at home mandates.
All should bode well for a positive start into the week for my colleagues over in Europe. Fund flows from last week indicate investors are still flush with cash so it might be time to put some money to work
Currency Markets
USD/CNH is trading lower in tandem with the broad dollar and risk-on sentiment.
USD/KRW is trading heavy with higher equities after South Korea insisted that North Korean leader Kim Jong-un is alive and well. Spot opened at 1232.5 and traded up to 1235 before slipping to 1227.7 with KOSPI +2% as foreign investors turned small buyers of local equities.
The MYR is trading on slightly better footing but arguably the slide in the near month oil contracts is providing poor optics. Still, the front end oil market capitulation is factored into currency markets which are pricing in an oil price bounce in 6-8 weeks. In the meantime, currency traders are living life vicariously through the lens of the "risk-on" narrative.
USD is under pressure since Asia opened as the USD is broadly slipping as risk rebounds. The Aussie has been on a tear probably driven by short position liquidations as much real money flows. And the FX traders will pivot to sell USD rallies until momentum stalls
Foward curve dynamics
There are significant structural changes in the forwards market via erosion of two-thirds the carry benefit to long USD/JPY positions year to date, and three-quarters since the extremes of late 2018 when spot traded at 114.