China Risk 

USDCNY fixed at 6.9409 today, +52 pips from last fixing and +8 pips since the previous closing at 6.9401 on 16:30 Beijing time. A bit lower than markets expectations. But the jitters are evident as demand for font end vols is back in demand with everyone looking for topside again. And while USDCNH spot traded above 6.95 briefly again but failed to sustain a move, the writing remains on the wall for a push higher in coming weeks.

If you don’t think China-US hopes are fading, with both sides now looking set to dig in for the long-haul markets could get much worse before better. Asian investors better hold on to their hats, as markets are about to get extremely blustery.

The Yuan depreciation train could be arriving at the station anytime soon. Indeed, USDCNH warrants a high degree of attention as the test of the vaunted seven looks level increasingly inevitable as based on current price action it continues to suggest CNY/CNH depreciation is in the tea leaves. Ultimately the Pboc will need to offer up some good old fashion easing to stem the negative economic tide in China?

Risk off 

If people are struggling to find a driver I suggest, they wake up and smell the coffee. The catalysts are nothing new Tariffs, Italy, Brexit, Saudi Arabia. But ut with the towering pillars of market strength, the US equity markets, is looking ever so fragile and on the verge of crumbling.  The air is so thick with a sense of foreboding that you can cut it with a dull butter knife. Maybe there are too many things going sideways clouding investor judgement, but things could turn nasty in a heartbeat.

With the worrisome prospects of US tax cuts have a much shorter shelf life than expected and with the asynchronous global growth sinkhole expanding, equities will have no place to go except into the tank taking global risk sentiment along with it.

With nary a silver lining to be had, we could be in the early stages of a protracted equity market meltdown. These market moves as more than just a classic case of risk aversion; this is time to stop looking at markets through a rose-coloured lens.

Oil markets 

Bargain hunters are emerging as traders will go back to the well on the first sign of risk stabilising given the macro sell-off has been a critical catalyst in energy prices this week. But in this risk-off environment, it feels as if this strategy is like sticking your tongue to a frozen flagpole hoping something good is going to come of it.