Boris Schlossberg
BK Asset Management
Market Drivers February 09, 2016
USD/JPY drops below 115
JGBs below 0%
Nikkei -5.40% Eurostoxx -0.54%
Oil $30.00/bbl
Gold $1189/oz
Europe and Asia:
EUR GE IP -1.2% vs. 0.2%
EUR GE Trade Balance 19.4B vs. 19.4B
GBP UK Trade Balance -9.9B vs. -10.4B
North America:
USD Wholesale Invetories 8:30
It's been a day of pure panic in Asian session trade as the Nikkei plunged by more than -5%, 10 year JGB went below 0% yield for the first time ever and USD/JPY broke below the long held support of 115.00.
The typically quiet Asian session saw massive volatility with USD/JPY plunging all the way to a low of 114.00 before finally finding some support and rebounding back above 115.00. Investor sentiment has turned so sour that they were willing collect negative yields on 1- year JGBs in a mad flight to safety move. The Nikkei has now managed to lose more than 10% since BOJ announced its negative rate policy and authorities are clearly becoming concerned that their move has backfired.
Japan's top currency diplomat Masatugu Asakawa came on the wires to note that the government was watching the FX moves carefully, but the jawboning had little impact on USD/JPY flows as risk off sentiment dominated trade. Several analysts have noted that Japan's policy makers have no good options against a backdrop of risk aversion with yen unwinding any and all moves as investors sentiment trumps BOJ's attempts at intervention.
With USD/JPY now broken below the 115.00 mark the pair has done a lot of technical damage. Still having fallen so hard so fast, it may see some short covering reprieve later in the week when Janet Yellen testifies on Wednesday. If Ms. Yellen is generally dismissive of the current volatility in the global markets and remains upbeat about US economic growth prospects USD/JPY could squeeze higher for a couple of hundred points, but investors now highly wary of risk, any rally is likely to be a just a dead cat bounce.
In North America today the calendar remains quiet and trading will most likely be dictated by equity flows. With European bourses having stabilized, currency traders will be watching the US open carefully. If US stocks can hold bid, then USD/JPY could pop to 116.00 on short covering action. However, if risk aversion resumes the pair could easily test fresh multi - month lows at 114.00 as short press their case.
USD/JPY drops below 115
JGBs below 0%
Nikkei -5.40% Eurostoxx -0.54%
Oil $30.00/bbl
Gold $1189/oz
Europe and Asia:
EUR GE IP -1.2% vs. 0.2%
EUR GE Trade Balance 19.4B vs. 19.4B
GBP UK Trade Balance -9.9B vs. -10.4B
North America:
USD Wholesale Invetories 8:30
It's been a day of pure panic in Asian session trade as the Nikkei plunged by more than -5%, 10 year JGB went below 0% yield for the first time ever and USD/JPY broke below the long held support of 115.00.
The typically quiet Asian session saw massive volatility with USD/JPY plunging all the way to a low of 114.00 before finally finding some support and rebounding back above 115.00. Investor sentiment has turned so sour that they were willing collect negative yields on 1- year JGBs in a mad flight to safety move. The Nikkei has now managed to lose more than 10% since BOJ announced its negative rate policy and authorities are clearly becoming concerned that their move has backfired.
Japan's top currency diplomat Masatugu Asakawa came on the wires to note that the government was watching the FX moves carefully, but the jawboning had little impact on USD/JPY flows as risk off sentiment dominated trade. Several analysts have noted that Japan's policy makers have no good options against a backdrop of risk aversion with yen unwinding any and all moves as investors sentiment trumps BOJ's attempts at intervention.
With USD/JPY now broken below the 115.00 mark the pair has done a lot of technical damage. Still having fallen so hard so fast, it may see some short covering reprieve later in the week when Janet Yellen testifies on Wednesday. If Ms. Yellen is generally dismissive of the current volatility in the global markets and remains upbeat about US economic growth prospects USD/JPY could squeeze higher for a couple of hundred points, but investors now highly wary of risk, any rally is likely to be a just a dead cat bounce.
In North America today the calendar remains quiet and trading will most likely be dictated by equity flows. With European bourses having stabilized, currency traders will be watching the US open carefully. If US stocks can hold bid, then USD/JPY could pop to 116.00 on short covering action. However, if risk aversion resumes the pair could easily test fresh multi - month lows at 114.00 as short press their case.
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.