Market Sentiment

Current Sentiment:
During yesterday’s London webinar we warned that current market conditions warranted extra caution. Global equities were spiraling downward, commodity prices plunging, snowballing devaluations and fears in some emerging countries prompted double digit currency declines sending investors heading for the exits, while locals began converting their saving to more stable currencies. In addition to all of that, the disappointment of the FOMC July minutes, and the fact that we are in the markets thinnest traded month of the year, created a “perfect storm” environment. What followed in NY was some of the most volatile trade since the Global Financial Crisis in what is being dubbed “Black Monday”.

Massive currency moves saw the EURUSD top 1.1700, and the EURGBP above 0.7400 as EUR short covering from last week was accelerated. However, the JPY was the real headliner for the day with the flight to safety temporarily pushing the USDJPY down almost 600 pips, CADJPY almost 700 pips, AUDJPY over 700 pips, and the NZDJPY & GBPJPY over 800 pips.

It is days like this that show the extreme importance of proper risk management in trading.

During Asia, the currency market stabilized after digesting the initial shock in NY and consolidating. NZD inflation expectations came in at 1.9%, unchanged from its previous quarterly release. The kiwi was not effected by the print.

Coming up today we have German IFO data during London, followed by US Consumer Confidence and US New Home Sales after the NY open.

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Source:: Market Sentiment