Quick Take
There is no respite in the USD weakening trend, now a very mature one, as the currency still loses value across the board, resulting in new lows in the prop index I personally monitor that aggregates the flows.
Quick Take
A setback in the risk tone proliferated across the currency space ahead of the FOMC policy decision this Wednesday, with a notable disconnect in terms of the percentage movements observed between the performance of equities and risk-on currencies.
Quick Take
On the back of the FOMC, and as the dust settles in financial markets, the Japanese Yen and the Swiss Franc continue to outperform for a second day in a row amid the lingering bearish outlook for the USD.
Quick Take
The hectic action in US equities in a move that was already building up in European and Asian equities has led to a quick transition into an environment that is back to ‘risk off’ flows dominating proceedings.
Quick Take
Judging by the impulsiveness of the sell-side action in the equity space last Thursday, and after a period of vol contraction lacking the snappy bounce many perma bulls would have wished for on Friday, there is real danger that the risk-adverse conditions may continue to be in command this week.
Quick Take
The market has gone through a very sharp reversal in risk sentiment over the last 24h as buyers returned in mass in the US equity space, leading to an outperformance of the Aussie in the currency market.
Stocks One Way, Forex The Other
Quick Take
As the dust settles and I take a snapshot of the latest market flows to re-formulate directional biases, there were a number of market moving headlines that certainly played an important role in sentiment.
Quick Take
The moves in FX were modest with fluctuations in confined ranges the norm. However, as we move into Asian trading on Thursday, risk-off associated currencies (JPY, CHF) are having another go higher as the market still acts prudent amid the resurgence of COVID-19 cases in the US and fears of a clean sweep by Democrats in the Nov election.
Quick Take
The British Pound was the main mover as one could have anticipated given the BoE monetary policy meeting, while the Yen and the US Dollar, both outperformed the rest of the FX pack. The disconnect between FX vs Stocks continues to be a notable feature at present.
Quick Take
I’ve been warning for a number of days now, if not a full week, that the out-performance of the Japanese Yen, the Swissy and to a lesser extend the US Dollar for the last 2 weeks is a major red flag. One that the seemingly broken ‘price discovery’ mechanism in US equities courtesy of the Fed’s liquidity inundation into the system failed to manifest.
Quick Take
Risk-off conditions picked up intensely as the market was caught completely off-guard by the bombshell that the trade deal between the US and China was over as announced by Trade representative Navarro. However, the news were later denied and we are back to square one.
Quick Take
Looking back to the last 24h, it was a rather convoluted affair during the Asian session, with a brief period of high volatility amid the scare over the termination of the US-China trade deal. In Europe, the risk sentiment mood was given a new jolt as EU PMIs beat expectations, fueling further selling in the Greenback, still on the back-foot.
Quick Take
Can the fulcrum underpinning financial markets (Fed’s QE) perpetually underpin the exuberance in stock valuations, or will concerns over the disturbing rise in COVID-19 cases in the US finally tilt the balance in favor of sellers in a more protracted manner?
Quick Take
There was no definable theme in FX during Thursday, leading to more chop in the charts, as depicted by the contraction nature of the currency indices performance. The fact that in the US equity space the S&P 500 found buyers off the bottom of its range didn’t help either, as it vindicates that the extension of range-bound conditions in equities too.
Quick Take
The unwinding of leveraged bets in markets kept its recent course of action, that is, stocks (down) and gold (up) traveling in opposite directions, while commodity-linked currencies faced mild pressure (GBP joined the bear party too) as the narrative in the US is swiftly transitioning from re-opening to re-closing.
Quick Take
It was a day characterized by the lack of clear trigger points, and that alone, may have been a dynamic sufficiently convincing for the equity bulls to force a gravitation of prices back up, while the commodity-linked currencies (AUD, NZD, CAD) also gained lost ground.
Quick Take
The quarter that was ended on a bang for equities with the S&P 500 printing 1.54% gains for the day and 19.95% for the quarter. Gold, the Pound and commodity-linked currencies, in this order, had a stellar performance, while the US Dollar, Yen and Euro succumbed.
Quick Take
The follow through in risk sentiment came to fruition and with it a fresh record high in the Nasdaq index, the S&P 500 sealing its bullish outlook as structure and momentum re-align, while the Pound and the Kiwi continue to be the darlings of FX this week.
Quick Take
The main take away from the last 24h of price action is that equities and currencies, despite the latter still moving at a slow pace, are still very much in-sync signaling that we are slowly but steadily morphing into a stage of more protracted ‘risk-on’ conditions in the marketplace.
Quick Take
The markets are slowly returning to life after a lukewarm ending last Friday ahead of July 4th Independence day in the US. The Forex market is expressing ‘risk on’ flows at the open in Asia while equities remain underpinned overall. These punchy in Asia are in line with the premise I’ve been promoting of a re-alignment in forex trends.