Risk holds steady as we begin the new week

Equities are showing slightly better sentiment so far today

S&P 500 futures +0.35%
Nikkei +0.69%
Hang Seng +0.10%
Shanghai Composite +0.10%

On Friday, weak Chinese data set off worries about further slowdown in global trade and that saw equities and risk have a tough time in trading. But as we start the new week, things are looking a lot calmer so far.

Japanese stocks are among the leaders in the region but no doubt sentiment is still looking rather cautious more than anything else. And that's largely reflected in the mild gains seen in Chinese equities.

It's very much a given that we're seeing some progress on the US-China trade front at this point, so investors need some other catalyst if they are to stir up a rally as we close out the year. The big event to watch out for that will be the Fed decision on Wednesday.

The Fed is largely expected to still follow through on a rate hike (~72% probability) but the message they send next will have massive implication for markets in general. If they come to a unified message on neutral rates approaching and moving to be even more data-dependent (watch for any changes on the "gradual increases are still appropriate" language), equities and risk will get a much needed boost into Christmas week.

For today, the cautiously optimistic sentiment is helping to keep yen pairs near the highs as we begin the day. USD/JPY sits at 113.51 currently but trading ranges for currencies are extremely narrow so far. Let's see if we get more of an extension later in European trading.

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