Global stock markets took another step down during yesterdays trading sessions with both the S&P 500 and the Dow Jones now trading in negative territory in the year. The same combination of global Geo-Political and trade risks continue to weigh on markets and the earnings season keeps producing mixed results with the downside surprises superseding the positives in the current environment. There was no real fresh catalyst for yesterday’s moves but investor confidence is hitting lower levels and with no real new positive news, the downside trend continued. Haven assets gained across the board with the dollar and Yen both having strong days. The exception to the usual rule was the Loonie which had a sharp topside correction after the Bank Of Canada raised rates as expected and then delivered a more hawkish outlook.
It should be an interesting day ahead and Asian traders will be expected their stock markets to be starting well on the back foot when they open in the next few hours. Currency analysts will once again be paying close attention to a number of pairs that are sitting at vulnerable levels with the Aussie trading just above the yearly lows around 0.7040 and Yuan in a similar position. Significant level breaks in these pairs which have been trading with a very strong correlation over the last year could see strong moves that translate over to other majors and see the greenback hit fresh highs on the year.
It’s relatively quiet on the fundamental data release front today so investors will be monitoring the news wires for any fresh developments in the market that will change sentiment. The main focus for the London session will undoubtedly be the latest ECB meeting, with the usual ‘no change’ firmly expected traders will be looking for Mario Draghi to provide the market with clear guidance on the ECB’s plans moving forward at the press conference. We also have US durable goods data due out with market expectation sitting at an 0.5% increase.