Markets brace for volatility after wall street selloff
|US stocks just posted their biggest one-day loss in three months, as political jitters and mixed earnings drove heavy selling on Wall Street. The reverberations of the selloff are already being felt in the futures market, with European equities already in the red.
The Dow Jones Industrial Average plunged 274 points on Thursday with all 30 of its components finishing lower. That’s the first such occurrence since September.
Surprisingly, haven assets such as precious metals only saw limited upside and were little changed ahead of European trade.
The US dollar index (DXY) has also weakened in recent sessions, but is on track for a weekly gain of around 0.6%. The euro remains under pressure while the British pound searches for direction.
A steady stream of economic data will make headlines on Friday. Action begins at 06:00 GMT with German producer inflation figures. The producer price index (PPI) is expected to come in flat for July, translating into a year-over-year gain of 2.2%.
Two hours later, the European Commission’s statistical agency will release the current account deficit for the month of June. At 09:00 GMT, Eurozone construction data will also make headlines.
In North America, Statistics Canada will release the latest inflation numbers for the world’s eleventh-largest economy. The Canadian consumer price index (CPI) is forecast to rise 1.2% annually in July, compared with 1% the previous month. However, CPI is expected to go unchanged month-over-month.
In US data, the University of Michigan will release the closely-watched consumer sentiment index at 14:00 GMT. Sentiment data are used by investors to gauge consumer spending, which accounts for more than two-thirds of US economic output.
Energy traders will also be monitoring the weekly rig-count report from Baker Hughes Inc., which is due at 17:00 GMT.
In monetary policy, Federal Open Market Committee (FOMC) member Robert Kaplan will deliver a speech that will be closely monitored by the financial markets.
EUR/USD
The euro ran into volatility on Thursday after the European Central Bank (ECB) released the minutes of last month’s policy meeting. The EUR/USD was last seen trading around 1.1730, where it faces immediate support at 1.1687.
USD/CAD
The USD/CAD suffered a sharp reversal on Thursday following weeks of steady progress. After peaking at 1.2764 in mid-week trade, the pair briefly fell below 1.2600 on Thursday. The short-term outlook will depend on Canadian data and the sustainability of the greenback’s latest recovery attempt.
DOW
The Dow Jones index fell 1.2% on Thursday and is currently trading at more than three-week lows. The sharp reversal is a clear sign that investors are becoming nervous about political developments surrounding President Trump. At the same time, however, the technical and fundamental pictures suggest the Dow is still primed to push higher.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.