Since the beginning of the week, financial markets have been stuck in limbo as trade war uncertainties linger. Asian equities closed in red as risk-off sentiment prevailed.
The Nikkei closed flat, while Chinese equities continued to suffer with the CSI 300 falling 1.03%. Indonesian equities suffered the most in Asian EM complex as the JCI erased 1.67%. However, European equities have been rather hesitant in early trading session, which suggests we may be out of the wood; however, the lack of good news could most likely translate into further weakness. The VIX indexed eased to 17.09 from 17.91.
In the FX market, investors continued to favour less risky asset. After surging across the board yesterday, the greenback consolidated gains this morning with the Dollar Index stabilising around 95.40. The index is currently testing the key 95.50 resistance area (high from June 21st). Given the highly uncertain environment, a breakout cannot be ruled; however, the buck is in overbought territory against most of its peers, which suggests that a pullback is highly probable.
EUR/USD is testing the support that lies at 1.1510 (low from May 29th and June 21st), USD/CHF failed to break the 0.9990 resistance (high from June 18th), while kept on treading water between 109.20 and 110.90. In the absence of fresh news, the market will stay in wait-and-see mode.
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