headlines:
Markets:
- Japanese Yen Advances, Australian Dollar Lags During the Day
- European stocks fell about 3% across the board; S&P 500 futures fell 3.2%.
- The yield on the 10-year US Treasury note fell 7.7 basis points to 3.719%.
- Gold falls 2.4% to $2,384.72
- West Texas Intermediate crude fell 1.9% to $72.13.
- Bitcoin down 11.5% to $51,445
It’s a very bad day for risk trading as we see a full-blown flight to safety across all markets. The carry trade unwind continues as the Japanese Yen surges again, sending the Nikkei index to its worst-ever decline since 1987. At today’s lows, USD/JPY fell 470 pips to 141.70 before settling around 142.80 now – still down 2.5% on the day.
The Swiss franc was another major beneficiary in the FX market. EUR/CHF briefly broke the lows of late December and early January at 0.9300 before remaining there now, down 0.5% on the day. USD/CHF fell 0.8% to 0.8500, its lowest since January.
The US dollar is in a more mixed mood, holding lower against the euro, yen and franc while trading higher against the pound, Australian dollar and New Zealand dollar. The Australian dollar is the biggest loser amid the risk-off wave with AUD/USD down 1.1% at 0.6440. It earlier hit a low of 0.6350.
In addition, bonds are the only other thing in demand, with US 10-year yields falling further as the inverted yield curve nears its end.
As for stocks, it’s been a one-way move with selling pressure on deliveries from Asia to Europe before settling down a bit. But it hasn’t really calmed down with S&P 500 futures now near their lows. Technology stocks are bearing the brunt of the declines, with Nasdaq futures down about 5% but it was much worse earlier.
It’s a sell-off with precious metals also sliding on the day. Gold is down more than 2% below $2,400 again with silver down about 7% to $26.62 currently – its lowest since May. Copper futures, meanwhile, have also fallen below $4 a pound and are threatening their 100-week moving average at $3.92 now.
Pain is everywhere today, and the bleeding will stop when it stops. Another reminder of the old adage, Never pick up a dropped knife.Be careful in handling risks/situations well. This is not the time to be a hero and pick the bottom. Just remember that not trading at all is also a stand-alone situation.
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