Asia markets start the session mostly quieted after the same price action in global markets with risk appetite depressed by China crackdown concerns and soft United States ISM Manufacturing PMI data. A strong US dollar against G10 and EMFX Paris has helped to push down oil and commodity prices. The Dollar Index, DXY, grabbed a firm buying flow to test recent highs above 92.50. The price action had a sentiment shift yesterday after weaker than expected data from Germany and USA, with Beijing announcing enhanced scrutiny for companies holding international IPO’s, as it ordered Chinese app stores to exclude DiDi just a few days after its offering in the United States.
Global market participants will now be paying attention to the FOMC Minutes to understand better the debate around full employment and non-transitory inflation outlook. Any new insights would fuel the tapering narrative; participants will be looking for any signal as to when the markets can expect to see an official bond tapering announcement. With earnings season coming up, positioning unwinds in the equity markets are also on the radar. The concerns around the COVID Delta variant are still suggesting a potential risk for the economy reopening after the latest stories highlight the declining effectiveness of Pfizer‘s vaccine. The “reopening trade” could face some weakening in the coming days.
