Risk Trades Lower as Market Approaches Big Thursday

We saw a bit of a flight to safety yesterday across the markets as we approach the end of the week which is laden with risk events. The main currency to gain was the Jpy as the stock markets took a bit of a pounding and UsdJpy once again broke beneath 110.00. Gold also continued it’s steady move higher as investors continued to buy in an uncertain environment.

It’s actually a fairly quiet day ahead with just the Aussie GDP on the horizon in Asia and secondary numbers due in the rest of the sessions but Thursday is a huge day with the UK election, the ECB and the Comey testimony all coming in what could be one of the most volatile trading days of the year. Due to the magnitude of the risk ahead the market is starting to position itself accordingly.

The main upcoming event is still probably the UK elections and the cable is still trading in line with a Conservative victory. All sorts of scenarios are of course possible but essentially a Conservative majority will probably see a relief rally in the sterling across the board, a hung parliament with probably be negative and a Labour victory should see a very aggressive move to the downside. Traders will of course be watching the updates avidly as they come through and this could lead to big moves in the Cable and crosses as sentiment sways from one party to the next.

Traders will continue to monitor the risk sentiment as we progress through today’s trading and will be paying close attention to the news wires for any fresh direction.

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