The drama in currencies continued this week, the Japanese Yen aggressively clawing its way back ahead of the BoJ’s interest rate decision next Wednesday. Too early to tell if the carry trade is finally beginning to unwind but this kind of strength has not been observed in a long time. The Australian Dollar on the other hand is getting obliterated, down almost 4% in the last two weeks alone. Gold sidelined for the time being, down 1.4% yesterday despite no real movement in the Greenback.
The past couple of sessions have been brutal for US indices, particularly technology stocks. Despite only slightly disappointing earnings reports from the likes of Tesla (TSLA) and Alphabet (GOOGL), the selling pressure has been strong and sustained. Predictably, the Nasdaq Composite bore the brunt of the sell-off, losing 3.64% on Wednesday, its worst day in well over a year, before a failed attempt at a rebound saw it close yesterday 0.9% in the red. Things weren’t much brighter for the S&P 500 either, falling 2.3% and 0.5% over the last two sessions.
Many traders are asking themselves if the hype surrounding artificial intelligence was really justified or if it was somewhat… artificial. The sudden rotation out of tech stocks is perhaps indicative of a crowded trade that is now unwinding. The selling pressure in the technology sector is at least somewhat contained, as testified by the Dow Jones, which actually rose 0.2% yesterday. Economic data releases have not helped orient markets this week, the manufacturing PMI publication yesterday revealing the sector in technical contraction at 49.5 as opposed to predictions of 51.7. Home sales likewise disappointed, but Q2 GDP came in unexpectedly high at 2.8% versus consensus of just 2%. The major event left on the economic calendar this week is the PCE price index; any significant deviation from predictions will most likely provide even more volatility.
Risk Warning : Trading derivatives and leveraged products carries a high level of risk.
OPEN ACCOUNT
