As risk sentiment deteriorates further due to rising sell-offs by big tech companies, stock markets fall sharply due to disproportionate gains in the Japanese yen.
➡️ Markets are dominated by strengthening risk-off sentiment, concerns about corporate earnings (mainly in the tech sector), and fears of an economic slowdown leading to recession before rate cuts can provide soft landings. The S&P 500 Index had its worst day in almost 1 year, closing more than 2% lower, while the NASDAQ 100 index based on technology closed down 3.65% yesterday. Asian stocks followed US markets lower, with sharp declines seen in major Asian indexes today. It increasingly appears that the strong rally in stock markets seen in previous months is over.
➡️ CME FedWatch tool shows a 99.5% expectation that the Fed will cut rates at its September meeting, with nearly 13% now expecting a larger cut of 0.50%. This reflects growing concern that the Fed will have to act to avoid a US recession.
➡️ In the Forex market, we witnessed a strong price movement over the past day, led by an extremely strong Japanese Yen. Since Tokyo opened today, the Australian dollar has been the weakest major currency in the Forex market, while the Japanese Yen has been the strongest, highlighting the AUD/JPY currency pair And the USD/JPY currency pair . The US dollar has penetrated a strong resistance zone starting at 103.92, but the price action there has turned bearish, suggesting that the dollar is very likely to move lower in the near term.
➡️ The Bank of Canada yesterday cut its overnight rate for the second consecutive month, as expected, by 0.25% to 4.50%. The Bank said further cuts are likely as inflation continues to fall. The Canadian dollar responded by weakening.
➡️ The Indian rupee still threatens to collapse to a new record low against the US dollar, after closing at a record low last Friday. The rupee is still at risk of falling to a new low, hence the currency pair USD/INR will remain the center of attention today.
➡️ Many raw materials have recorded a sharp decline in recent days, with silver standing out for the strength of its decline, reaching an almost 3-month low in price.
➡️ Data released yesterday on the Flash Services & Manufacturing PMI in the US, UK, Germany and France were very mixed.
➡️ Advance data on GDP, which is expected to show an annualized 21TP3Q economic growth rate, and unemployment claims will be released today in the United States.
Credit by DailyForex.com
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