European and U.S. equity sell-off continues, Gold keeps on surging

Market Brief

Uncertainties are flying over financial markets, volatility was important this Monday. In the U.S, the S&P 500 recorded a loss as it closes at -1.42% at 1853.44 points. The fear of a U.S. recession is now more than a possibility and markets are pricing it. It then pressures Treasury yields. Indeed 10-year yield are very close to last year’s low of 1.6357%. Other major American indices, DJIA and Nasdaq 100 fell respectively by -1.1% at 16027 points and -1.59% at 3960.671 points.

The sentiment is risk-off at the moment, with Gold reaching $1,200 for the first time since June. Golds bullish momentum continues, yet commodity linked currencies like AUD and NZD failed to gain the advantage as outside precious metals, other commodities broadly fell. In particular, WTI Crude is now back towards below 30 dollars a barrel over lingering oversupply concerns. Markets are now fearing that the lingering low oil prices period should last a long time.

Benoit Coeure from the ECB has talked yesterday and confirmed that the European institution will decide whether further monetary policy will be applied at its March meeting. Falling inflation expectations would trigger a reaction from the ECB. For the time being, ahead of the Eurogroup meeting that will be held this Thursday, Greek bonds are extending their losses over disagreement in pension reform. The 10-year is now yielding at 10.18% up from 61 basis points

In the Asian session, the Nikkei dropped over 5% as safe haven flows sent the JPY higher despite insisting rumours saying that the Bank of Japan should ease further. The Japanese currency has climbed because of concerns over the European banking sector. The demand for the yen, which serves as haven, has sent the Japan’s 10-year government bond yield below zero for the first time. The USDJPY has broken the key psychological support at 115.0 for the first time since November 2014.

In Europe, equity futures are down this morning with the Footsie and the Dax trading in negative territory, respectively down -0.26% and -0.91%.

Today, traders will be watching U.S. Wholesale Inventories, U.K. Trade Balance, German Industrial Production, and Mexican CPI.Uncertainties are flying over financial markets, volatility was important this Monday. In the U.S, the S&P 500 recorded a loss as it closes at -1.42% at 1853.44 points. The fear of a U.S. recession is now more than a possibility and markets are pricing it. It then pressures Treasury yields. Indeed 10-year yield are very close to last year’s low of 1.6357%. Other major American indices, DJIA and Nasdaq 100 fell respectively by -1.1% at 16027 points and -1.59% at 3960.671 points.

The sentiment is risk-off at the moment, with Gold reaching $1,200 for the first time since June. Golds bullish momentum continues, yet commodity linked currencies like AUD and NZD failed to gain the advantage as outside precious metals, other commodities broadly fell. In particular, WTI Crude is now back towards below 30 dollars a barrel over lingering oversupply concerns. Markets are now fearing that the lingering low oil prices period should last a long time.

Benoit Coeure from the ECB has talked yesterday and confirmed that the European institution will decide whether further monetary policy will be applied at its March meeting. Falling inflation expectations would trigger a reaction from the ECB. For the time being, ahead of the Eurogroup meeting that will be held this Thursday, Greek bonds are extending their losses over disagreement in pension reform. The 10-year is now yielding at 10.18% up from 61 basis points

In the Asian session, the Nikkei dropped over 5% as safe haven flows sent the JPY higher despite insisting rumours saying that the Bank of Japan should ease further. The Japanese currency has climbed because of concerns over the European banking sector. The demand for the yen, which serves as haven, has sent the Japan’s 10-year government bond yield below zero for the first time. The USDJPY has broken the key psychological support at 115.0 for the first time since November 2014.

In Europe, equity futures are down this morning with the Footsie and the Dax trading in negative territory, respectively down -0.26% and -0.91%.

Today, traders will be watching U.S. Wholesale Inventories, U.K. Trade Balance, German Industrial Production, and Mexican CPI.

Currency Tech

EURUSD
R 2: 1.1495
R 1: 1.1387
CURRENT: 1.1181
S 1: 1.0711
S 2: 1.0524

GBPUSD
R 2: 1.5242
R 1: 1.4969
CURRENT: 1.4408
S 1: 1.4081
S 2: 1.3657

USDJPY
R 2: 125.86
R 1: 123.76
CURRENT: 115.19
S 1: 105.23
S 2: 100.78

USDCHF
R 2: 1.0676
R 1: 1.0328
CURRENT: 0.9858
S 1: 0.9786
S 2: 0.9476

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot