Nervous Markets Kick off the Week – Nasdaq down 1.5%
US stock markets closed the week on the back foot on Friday as continued geopolitical concerns and high yields influenced investor sentiment. The Dow finished 0.86% down on the day, the S&P lost 1.26% and the Nasdaq once again took the brunt of the pain closing 1.53% in the red. US treasury yields did slide slightly on Friday with the benchmark 10-year dropping 2.7 basis points and the more rate sensitive 2-year losing 7.2 basis points after some more dovish comments from Fed members, but overall the trend is still to the topside. The dollar slipped slightly but remained trading in relatively tight ranges against most of the majors. Gold peaked just under the key $2,000 level and Oil dropped after Hamas released 2 US hostages, providing a much needed Silver lining to Middle East storm clouds.
Yen in Focus for Currency Traders
The Yen will be in sharp focus for currency traders today and in the week ahead as UsdJpy peeked its head above the key 150.00 level in early trading today. Options players have since pushed it lower to settle just under the big figure, but traders are on alert for possible intervention from the Bank of Japan. Fundamentals are pushing the pair higher with US rates pushing higher quicker and the BOJ looking to maintain its accommodative policy – US 10-year treasury yields are almost 6 times their Japanese equivalent. The Yen hasn’t appreciated anywhere as near as much as some traders would expect with the current Middle East conflict playing on investor fears and traders are expecting it to continue to move higher – However things can change quickly, especially if the Japanese authorities jump into the market anytime soon. Traders are preparing for some tricky trading conditions ahead!
Quiet Calendar Day to Start the Week
The macroeconomic calendar is extremely bare to kick off the week today although traders are once again not looking to put their feet up, as geopolitical concerns and potential intervention could make for an interesting day ahead. The Asian session has absolutely nothing on the calendar but any fresh news out of the Middle East or more moves through 150 in the Yen could see things liven up quickly. There are just the Buba Monthly Report and Euro Consumers Confidence data releases due out in the London session but once again these are not expected to move markets considerably and there is nothing due out in the North American session. Normally traders would be expecting tight range bound conditions with a set up like this, but that’s unlikely to be the case today.
