The market right now is running out of leads as to where it wants to go. All fundamental reasons has more or less come out and it’s a matter of time that these reasons gel up to be a strong catalyst for the next move.
The prospects of a risk-off scenario would be:
1. US-China Trade War tensions, which has started to form shape. China hasn’t been able to able to purchase the agreed amount of goods from US. While US says that they are not interested to renegotiate the deal. Further escalation of this and we might see a risk-off scenario in the market.
2. COVID-19 Source blame game started with US pointing the finger at China’s inability to secure the virus in their lab. While China points at the US for bringing the virus to Wuhan last October through the Military World Games.
3. Wave 2 COVID-19 pandemic.
On the flip-side, the market is waiting for 1 key event this week. FED Chairman Powell will be speaking tomorrow night 9PM (GMT+8). The tone of his language will most likely trigger the next move in the markets. He will most likely address the impact of COVID-19 which is already digested by the market and would most likely add that the FED will always be ready to inject stimulus when it needed be. The injection of stimulus would most likely be the trigger for a risk-on scenario.
4. AUD, NZD and CAD will have a grand day moving up.
Remember, the market has its own divine way of creating a trap for buyers. This could just be it as the prospects for fear may begin to tilt to its favour.