Intraday Market Thoughts

Signals Within the Wild Ride

by Adam Button
Mar 28, 2018 14:00

US dollar strength on Tuesday morphed into risk aversion. The yen was the top performer while the Australian dollar lagged. The Asia-Pacific calendar is light. A new JPY trade has been posted for Premium subscribers. End of month and end of quarter flows will likely enforce USD corrective action ahead of the Easter Holiday long weekend. انتهاز الحركات التصحيحية (فيديو للمشتركين فقط)

Ashraf warned about yen strength late last week and that unfolded in the latter stages of trading on Tuesday. It has been a harrowing time for intraday traders with some major swings hitting.

The confluence of trade jitters, tech/privacy worries and month-end came together all at once on Tuesday. The S&P 500 fell by as much as 61 points at the lows after gaining 20 points at the highs in a brutal whipsaw.

USD/JPY was sucked lower down to 105.38, erasing what had been a strong start to the day for the dollar. But the overall USD corrective action has forced the pair towards 106.20s as indices attempt to get back in the green.

The dangers of trading at month/quarter end are well known but the swings in the past four trading days have been especially violent. Note the consistent pattern risk aversion in late Jan, Feb and now March so far this year.  For the S&P 500, it's critical that it stays above the 200-day moving average, which is currently at 2587.

A worrisome signal emerges from bonds as 10-year yields fall below recent support, reaching six-week low at 2.77%. That could help to accelerate USD/JPY towards the targets that Ashraf has highlighted.

For what's next, continue to watch for headlines on trade but note that tech is increasingly driving the broader market as well. Moody's downgrade of Tesla's, Goldman Sachs' downgrade of Apple's iPhone sales and Facebook's ongoing privacy jitters has accelerated the sector into sell mode.


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