Posted on: 09 February 2016, by: Pepperstone Support, category: Market Review
Risk selloff extended into the NY session following a rout in European markets overnight. Main reason being cited as the spark to the risk off theme was the underperformance of European banking stocks. Euro Stoxx banks index closed 6.36%. Greek markets hit as Athens stocks fall to their lowest levels since 1990.
WTI traded back under 30.00 bbl during early NY trading. Saudi and Venezuelen oil ministers met Sunday but there does not seem to be any apparent change in Saudi’s stance about its willingness to participate in an emergency Opec meeting.
As risk soldoff, xau caught a bid trading to a high of $1201.18/oz. Next major resistance comes in around the 1228 level.
Despite the weakness of European banks during the London session, EURUSD bounced off the lows around 1.1085 as NY trade began and has traded back above 1.1200, now settling in around 1.1190.
USDJPY took a beating as it saw a dramatic decline from around 117.50 down to 116.50 before the open. Following the open the selloff continued pressuring the pair to a low of 115.17.
Cross asset moves were also dramatic but key support levels are holding in for now:
US 10y tests 1.74% support. No major level is seen below there until the 2015 low of 1.64%.
WTI bottomed out ahead of $29.50. Support is the $29.40/25 area. Now $30.10.
The S&P low was near 1828.50. Below, 1812-1820 marks the lows from April and October 2014 and January 2016. Many see 1800 as a key psychological level and the 200w MA is at 1790.
Looking ahead, Tuesday is expected to be another quiet day as it sees the bulk of Asian holidays. Activity should pick up on Wednesday, which is when Fed Chair Yellen will deliver the semi-annual Monetary Policy report to Congress. The text of the speech will be released at 8:30 EST/13:30 London time and she delivers it at 10:00 EST.
Brexit will also remain a focus. Our trading desk prefers to hold small short GBP positions but remain very light in our USD participation with GBPCHF and EURGBP being a little clearer in their makeup. GBPJPY remains a sell towards 175.00 and a quiet data week will give us more time to address the Brexit headlines that will only become more of a focus as June approaches.