Stock markets extended their losing runs though yesterdays trading with the US indices now on their sixth day of straight losses, volatility was excessive and the damage wasn’t as bad as this time yesterday but still sentiment is getting rocked across the market. The move in the US prompted President Trump, never shy to back his own kudos, to declare that it is the Fed’s fault and he could do a better job than them. In face of the equity turmoil, the currency market had a relatively subdued day and the dollar lost some ground against the majors as the US CPI data printed slightly lower than expected, notably USD/CNY dropped sharply back through 6.9000. The same could not be said in the precious metal markets as Gold had a stellar day, jumping well over 2% on the day.
It’s going to be an interesting last trading day of the week today with many investors hoping for a bit of respite after the last couple of days. There is a bit of light at the end of the tunnel with news that the US and China are setting up a meeting between their respective leaders at the upcoming G20 meeting. Given the moves that we’ve seen this week and the recent escalation of trade tensions between the two nations, investors will be hoping that they can set an agenda that will calm the growing concern. However, some of the moves were spurred by concerns over the upcoming earnings season and we get the first results though today, if we do see a larger number of companies falling below expectations over the coming weeks then that will certainly add more fuel to the downside fire.
Into the Asian session today and naturally investors will be focusing on the stock market opens with futures once again pointing lower. Currency traders will be looking closely at risk sensitive pairs and we did see a bit of respite for them overnight with both Aud and Nzd gaining ground again off of recent lows and even the Yen seeing a small depreciation towards the end of the session. However expect further moves in line with the ‘risk off’ trade if the moves in the equities continue south or worse, start to accelerate.