Asia Pacific Market Open – Risk Aversion, Brexit News, USD/JPY, EUR/USD
- As expected, European and US benchmark stock indexes declined across the board
- Anti-risk Australian and New Zealand Dollars declined as the Japanese Yen[1] gained
- Pause in EUR/USD[2] fall offered update to my Euro[3] trade setup, now short at 1.15159
See our study on the history of trade wars[4] to learn how it might influence financial markets!
The British Pound[5] was arguably one of the best performing majors on Thursday, aided by a couple of developments during the European session. First, you had a rally in UK government bond yields along with what appeared to be a corrective pullback in the US Dollar[6] after persistent gains over the past few days. Then, Sterling got a further boost amidst a new Irish border proposal to help push Brexit talks forward[7].
Other notable FX gains were seen in the traditionally anti-risk currencies such as the Japanese Yen and Swiss Franc[8]. Those gained traction amidst losses from APAC, European and US benchmark stock indexes as expected[9]. The S&P 500[10] suffered its largest decline in a day (-0.82%) since June 27th. Equities have generally been under pressure amidst tightening global credit conditions as US government bond yields soared recently to multiyear highs.
Sentiment-linked FX such as the Australian and New Zealand Dollars underperformed against their major counterparts. But as a relatively ‘risk-neutral’ currency pair[11], AUD/NZD[12] largely traded sideways and has been for some
