Macro Afternoon

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The G20 and the trade war truce between China and the US has lifted risk spirits despite a slew of very poor manufacturing PMIs released in Asia today. The Yuan has jumped against USD with the USDCNH at a near three month low while the Aussie dollar has tanked on the Chinese PMI print, Yen continues to selloff helping domestic stocks in Japan.

The Shanghai Composite has lifted over 2.2% to close well above the 3000 point barrier that held it back all of last week while the Hang Seng Index is closed for a holiday.

Japanese share markets also bounced past the 2% barrier with the Nikkei 225 closing 2% higher to start the week on a much firmer note at 21729 points. A lot of the positive mood is due to a selloff in Yen with the USJDPY pair pushing right through the 108 handle and establishing itself well above the dominant downtrend line (black sloping line) but this does look too overbought in the short term:

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The ASX200 is the odd one out, only lifting about 0.4% despite a much weaker Australian dollar, closing at 6648 points. The Australian dollar gapped higher on the Monday morning open but this was a false dawn as it sold off sharply on the back of the Chinese PMI and other prints, pushing back down below the 70 handle and signalling that the rally of the last two weeks maybe over:

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S&P and Eurostoxx futures are both up at least 1% higher reflecting the positive mood following the G20 summit with the four hourly chart of the S&P500 chart showing a big breakout above the previous weekly highs at the 2970 point level that should translate into a new rally here:

The economic calendar starts the week with two big ones – German unemployment and the latest US ISM Manufacturing prints.

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