Volatility remained high through yesterday’s trading sessions as move across the markets continued to be hard and fast. Early on in the day we saw further moves down in the equities indices as the market picked up where the US had left off and pushed stocks even lower, this led to decent moves back to the topside in the dollar with the Dxy making it back up to 90.00 on the day. The US session kicked off in the same vein early on with the Dow hit hard on the open but we have now seen signs of recovery and it’s finished the day back up 2.33%. This was helped by comments from Treasury Secretary Mnuchen and Fed member Bullard who both seemed to take the recent excessive moves in their stride.
We saw a big focus on Australia during the Asian session yesterday as first Retail Sales and then the RBA put further pressure on the currency. Retail sales were weaker at -0.5% (exp -0.2%) and the RBA stuck to it’s recent rhetoric particularly and this keeps expectations low for a hike in the short or even medium term. This led to a further sell off in the Aussie dollar which eventually found some support on the day around 0.7835, we’ve since seen a bit of a recovery later in the day as global risk appetite increased and the Aussie has made it back above 0.7900.
This morning we have already had some decent numbers out of New Zealand with the employment numbers coming in stronger and the unemployment rate dropping 0.2% to 4.5%, this led to a swift 50 pip rally in the flightless bird.
Traders could be forgiven for thinking we’re nearing the weekend after the recent moves but it’s still only the start of trading on Wednesday and there’s plenty more ahead this week including two central bank announcements – RBNZ first up tom morning at 7.00 am. Looking ahead to today’s trading and traders will continue to focus on the equities markets for the next moves coming across to the currencies, it certainly feels like there’s a lot more coming from the market in the next few sessions and we expect volatility to remain high. It’s fairly quiet on the fundamental data front with very little to trouble the scorers up to the US session where we have the weekly Crude Oil Inventories due for release, so the markets will remain flow driven and traders will continue to monitor the news wires very closely for any fresh catalysts.
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