Cash flows are directed to risky assets

Risk on!

The Asian session continued with Wall Street positivism and markets turned green. The first catalyst still triggering the rally during a US session yesterday was the full withdrawal of the controversial bill from Carrie Lam in Hong Kong. The second catalyst came during the Asian session and it was related to the trade war. In a telephone conversation, the US and China agreed to meet in early October to resume trade talks.

Of course, we have seen this scenario before, but at this stage the markets accept everything only to have a positive rally catalyst. From the news so far, the US dollar has become cheaper, defensive assets like gold and franc. Oil has risen in price after the news despite more stocks yesterday, with European indices indicating a rather positive start to the session. Today in the calendar for Europe we have only factory data for Germany, and later on the European movements will also have US data, which are sufficient in quantity and quality.

During the State session, we will be expecting data on ADP change in employment, initial requests for benefits, PMI in the services sector, production orders and ISM PMI outside the manufacturing sector. At the end of the European session we will also see the official data on oil reserves.

Today, we expect risk sentiment to persist, with cash flows consolidating their direction towards risky assets, which will remain until the end of the day. Of course, provided that no negative catalyst emerged, especially in the trade war. Today we expect Boris Johnson's next move for early elections and a no-confidence vote. Yesterday he suffered two heavy losses, which greatly shook his confidence not only on the part of the rebels but also on the part of the government.

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