Another Day Another Drop – Nasdaq off 3.4% this week
US markets experienced another poor day on Thursday as a bad week gets worse for investors, the Dow closed down 0.84%, the S&P dropped 0.77% and the Nasdaq had another day where it lost over 1%, finishing up 1.07% in the red- its biggest 3-day drop since February. Concerns of higher interest rates for longer in the US continue to pressure the market and US treasury yields push higher on an almost daily basis, the benchmark 10-year hitting its highest level since October yesterday. The dollar continued to grind further north with the DXY touching a 2-month high overnight, although traders remain cautious as talk over intervention in some currencies has started to pick up and we could see some sharp corrections.
Aussie Dollar in Focus for Traders
The Aussie dollar has taken a pounding over the last month or so as it has been hit by the twin impact of a strengthening greenback and growing concerns about the Chinese economy. It has dropped 7.7% from its mid-July highs and traders see little to encourage buyers in the market in current conditions. Yesterday’s employment data confirmed a slowing job market and this has translated through to many concluding the Reserve Bank of Australia has reached a peak in this tightening cycle. The ‘battler’ tends to struggle in risk-off environments and this is no exception now, if global growth continues to slow, then expect further downside risks for the currency.
Quiet Day to Close the Trading Week
Market sentiment is certainly skewed to the downside as we move into the last trading day of the week and there is little on the event calendar to change things today. The only real data release of note comes in the London session today with the release of Retail Sales data in the UK, expected to show a month-on-month drop of 0.6%. Traders will, however, be keeping a very close eye on market flow and the newswires, especially in FX, where some talk of intervention has started to creep through with the dollar hitting fresh highs on a daily basis. This could lead to some sharp and whippy trading conditions, especially as we hit lower liquidity conditions into the weekend.
