Talking Points:
• Market sentiment is raw, but the markets have yet to make progress to the next stage of risk aversion
• China has amplified its effort to rein in exchange rates discrepancies but will it curb capital outflow?
• While risk hesitates, crude selling refuses to abate now down 7 straight trading days
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Like a bolder hanging over the market, risk aversion still looks like a serious threat - and opportunity - for the investment community. However, it is prudent not to jump on the train until we are sure it intends to go. While there were a few hints of deleveraging gaining traction, the evidence was flimsy and isolated. Instead, we find the equity indexes still abiding key support and the most liquid Yen crosses standing up to imminent support. There is little to miss by awaiting a break and much to preserve in case the the markets aren't ready. Looking for catalysts to this big picture theme, data is light in the upcoming session; but China tops the charts. The PBoC upped its effort to close a broadening gap in offshore and onshore exchange rates which signals their conviction but may also breed concern. Meanwhile, commodities are being drug lower by US oil suffering one of its longest string of losses in six years. We look at these active and lurking themes in today's Trading Video.
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