Asian markets could trade sideways as liquidity was thin yesterday due to a holiday in the US. However, with rates markets closed, the USD remained under pressure, with participants potentially seeing that the inflation has peaked, and the Fed could achieve a soft landing easing the tightening pressure in the coming months. This scenario could be a key argument for global macro participants to take more risks in Emerging Markets. Chinese markets could be one to watch as cyclical sectors would be preferred with a shift on the USD and a focus on better economic conditions in the coming quarters.
On the radar for the session ahead, US Treasury Secretary Yellen will meet with China Vice Premier Liu He, and traders will be watching the meeting as this will be the first face-to-face meeting between the pair. Exchange of views expected on macroeconomic developments and other economic issues. Also, Japanese markets should be watched closely as pressure on the JGBs, and JPY was seen recently, as a BoJ hawkish meeting is expected this week. Today’s China’s macro releases will be eyed in the context of the country reopening from strict Covid restrictive actions.
