Risk recovery fails to stick - European and...>

FOREX: Risk recovery fails to stick

- European and US indices rallied sharply at their respective opens Tuesday,

raising fresh hopes that this protracted drawdown in equities may not last. The

dose of optimism saw E-mini S&P futures hit the limit up ceiling (+5% from

previous close) the session after the index hit limit down. The rally failed to

stick, however, as US press talked down the odds of an imminent stimulus package

being announced by Trump and the White House. European equities were marked

lower on the news, with peripheral markets leading the way as Italy and Spain

closed with losses of over 3% apiece.

- Waning risk appetite dragged USD/JPY off the 105.21 recovery high and the USD

regained a semblance of strength as Treasury yields picked themselves off the

mat. The longevity of this bounce remains to be seen, with investors' acute

uncertainty still reflected in JPY call bias and still high implied volatility

for haven FX.

- Australian consumer confidence, UK production data and US CPI are all due

Wednesday. RBA's Debelle is also due to speak.