Global stock markets remained under pressure yesterday as trade concerns continued to weigh on investor sentiment. It was a sea of red across the global indices yesterday and it looks set to be a tough start to the session for Asian markets with US bourses closing well down, the Nasdaq over 1.5% leading the way with the Dow and S&P following closely, both losing over 1% on the day. Haven currencies caught a strong bid with the Jpy and Chf gaining strongly against the greenback and on the crosses and Gold surged over 1%. Oil crashed hard as the combination of trade concerns, US stockpiling and increased tensions in the Middle East all contributing to sharp moves, WTI dropping over 6% on the day and down nearly 10% from this weeks high.
Some of the major currency pairs played catch up yesterday to the moves that FX traders had seen already earlier in the week in emerging markets. Investors hoping for some positive news on the trade front are becoming more frustrated and we’re now seeing moves across global equities and risk currencies that justify the concern that has been building over the last few weeks. The Yen is the traditional go to currency in times of market meltdown and if we start to see further escalation of investor concerns then both UsdJpy and the Jpy crosses will break into fresh downside trading ranges. AudJpy in particular is a strong barometer of sentiment and it’s sitting just above recent lows, if we see a continuation of the kind of moves that we saw in yesterdays trading day then expect it to break lower hard and look to target the flash crash lows that we saw in early January.
Looking ahead to today’s trading calendar and there’s not much due out in the Asian session. Focus will be firmly on the UK as the European day starts with Retail Sales data due out and PM May set to put announce a schedule for her resignation. US Durable Goods data is due out in the New York session but once again expect to greater sentiment plays to dominate markets into the weekend.