It’s been another volatile day on global markets, with stocks initially falling lower and continuing the equity market rout of the last few days. The dollar has also had its fair share of movements today, gaining strength as equity markets fall pushing EURUSD and GBPUSD lower and the USDJPY back higher. Gold prices fell however taking away the feeling of safe haven buying in the precious metal, and Bitcoin gained slightly as investors still maintained a buy the dips attitude to the crypto currency.
The stock markets were the centre of attention this afternoon, and I can’t remember a time for a long while where there was so much anticipation around the Wall Street open. However after last night’s 1,175 point fall on the Dow all eyes were on whether the sell off would continue, and initially, it did. Pre market figures showed an expected 600 point fall on the open, but a rally ensued early on. That’s left markets swinging between positive and negative leaving investors a little nervous and unwilling to nail their colours to the mast.
Again there is very little news flow that has got markets going, and I still don’t buy into the inflation story as a catalyst. This definitely looks like the beginning of a correction, but just how deep we obviously don’t know yet. We have seen comments from Mnuchin stating that he does believe this is a correction. Nothing is fundamentally different, and the US economy, as well as the global economy is still in a strong position.
Overall it’s a case of a degree of calm today after the mess that was yesterday’s session. Many traders will have been on margin call and looking for some kind of recovery today. The strength of today’s markets could well determine just how long the turmoil and panic lasts for. Such is the nervous knife edge position at the moment, we could go either way during the Wall Street session, and nobody could rule out a repeat of yesterday’s move. The gains in the US have helped to pair the losses for European equity indices with the Dax and FTSE off the lows for the day. However traders in Europe will be keeping a close eye on the rest of the US session for a precursor to tomorrows fare.
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In this edition of “Charts of the Week”, we will have a look at precious metals where the short-term outlook has turned brighter, as well as Bitcoin which is going through a major sell-off right now, followed by Oil – which is finally on the move after days of consolidation – and two major currency pairs.