Asian stocks are mirroring the climb in US equities, after all three US benchmark indices posted fresh record highs. Investors are clearly in high spirits during this year-end season, with the 2020 global economic outlook turning brighter in anticipation of the US-China “phase one” trade deal. The buying momentum is likely to be sustained, amid expectations that the manufacturing sectors around the world as well as global trade conditions can take advantage of the expected rollback of tariffs, while major central banks persist with their accommodative stance.
Brent trades at highest level since September
The risk-on mode is also clearly evident in Brent Oil, which is carving a path towards the psychologically-important $67/bbl mark. Investors will be closely eyeing the EIA US inventories data, due later today, to see whether Oil prices can be justified higher. With Brent’s 50-day moving average having already broken above its 100-day moving average earlier this month, Oil prices could climb another leg higher on signs that OPEC+ supply cuts will be extended past March 2020, falling US inventories, as well as evidence of demand-side improvements stemming from thawing global trade tensions.
Risk appetite needs to kick into another gear for USDJPY to push higher
The current risk-on momentum however doesn't appear enough for USDJPY to punch above the 109.6 level for the time being, with the currency pair adhereing to its low-volatility character. As long as risk appetite can hold up, the expected bias for USDJPY is to the upside through Q1 2020, as it carves out slow and steady steps towards the 111.0 level.