Equity markets were very heavy yesterday
Ichimoku Kinko Hyo EUR/JPY: The EUR/JPY pair is now testing the lower level of the cloud…
EUR/USD was little changed in the previous session
Information is not investment advice
Ichimoku Kinko Hyo
USD/JPY: The USD/JPY pair is now testing the upper level of the Kumo. A successful attempt to exceed this level will trigger the market to move higher. A failed attempt to exit the cloud will push prices lower.
European Market View
The first central bank meeting is that of Riksbank. It is expected that Riksbank will leave policy rates unchanged and maintain a fully flat rate path at zero.
In the equities space we saw a full-blown risk-off sentiment hitting the markets yesterday for a first in a very long time. Risk-off also went cross asset, as investors rotated into cash or bonds and sold off most sectors and stocks. S&P 500 dropped -1.7% while it fell by as much as -2.9% during the trading session, with as many as 450 out of 500 names where in the red. Other US indices such as the tech NASDAQ fell -2.2% and Dow Jones -1.8%.
Implied volatility spiked, with the VIX index just south of 30 intraday, before falling back to 26. In terms of sectors, energy, financials autos and materials were hit the worst. Interestingly, big tech did not prove much safety. Safe haven sectors such as utilities, health care and consumer staples coped best in this choppy environment. Sentiment appears to have stabilised this morning. Chinese markets are still closed for holiday, and newly opened Nikkei is doing a -1.7% catch-up but Hong Kong only -0.3%. US futures point to a rebound with futures nearly 1% higher.
In the FX space, EUR/USD was little changed while crosses like the EUR/GBP, EUR/SEK and EUR/NOK all rallied because of the risk sentiment.
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