The dollar is keeping lower for the most part to start the session
Asian equities are rotting today with the Hang Seng closing in on 5% losses with Chinese equities having just extended losses to over 3% ahead of the close. Meanwhile, India's Sensex index is down by nearly 12% as stocks take a beating.
US futures hit limit-down earlier and that did not help with the risk mood while bonds are staying bid to kick start the new week. As a result, the yen is leading gains across the board with USD/JPY back under 110.00 with the dollar trading a little softer.
However, much like what we have seen on Friday, don't count on the greenback just yet. In this kind of market mood, things can easily switch back up and the dollar could start flexing its muscles again as flows to the greenback have been self-reinforcing.
The rush to the exits in emerging markets is also part and parcel of that so the dollar will be able to find some support regardless, with funding pressures still likely to persist.
Looking ahead, it is all but a balancing act for the market as investors have to deal with dollar funding pressures, central bank and government actions, as well as coronavirus developments to see which direction we are headed towards.
It is all a question of where in the cycle we are at as well at the moment.
In any case, coming up later in the week, we'll have key economic data releases to watch as well with euro area PMI data to come tomorrow and US weekly jobless claims on Thursday. The latter is going to be a real showstopper so make sure not to miss it.
