Collinson FX: January 4, 2019 - Apple triggers Flashcrash
by Collinson FX 6 Jan 2019 21:54 AEDT
6 January 2019
Collinson FX: January 4, 2019 - Apple triggers Flashcrash
The markets continue to suffer abnormal volatility, with the DOW plunging 670 points on Apple revenue warnings, although a recovery is underway in late trade. Market conditions remain the same in 2019 as 2018, with uncertainty surrounding the US/China trade war and the Fed’s policy direction, which would suggest volatility will prevail. The Apple revenue warning surprised markets and had a much bigger impact which was due to light markets and little in the way economic data releases. US employment data looks steady with the release of the ADP and Challenger Jobs reports. These both suggest the Labour market will continue to be robust.
The Apple announcement hit markets hard, with the US 10 Year bond yield crashing to 2.58%, while the Dollar fell. The immediate market impact triggered a ‘flashcrash’ in pre-Asia market trade, which saw the AUD crash to 0.6870 from 0.7000. This was a market aberration and was rectified throughout the days trade. The AUD trades back above 0.7000, while the NZD pushed up slightly on a weaker reserve. The safety trade has pushed the Yen to 108.20, while the EUR trades around 1.1400, amidst weaker economic data and prospects.
Nervous markets remain volatile and until some certainty returns we can expect abnormal movements. Trade and Central bank policy/speculation will dominate the narrative, while economic data will soften.
Collinson FX: December 31, 2018 - Massive Boxing Day rebound
A huge trading week was experienced over the Christmas period. A massive sell-off in equities was suffered Christmas Eve, only to see a massive rebound in a Boxing Day rally unrivalled in 10 years!
The volatility is incredible, even considering it is light holiday season trade. The final quarter of the year has been disastrous for global share markets, which have been savaged, as a direct result of global trade wars and the Fed’s Monetary Policy. The election of the Democrats to Congress promises to stagnate the successful Trump economic policies over the next two years. The ensuing impasse will continue until the Presidential elections, although the Trump settings of deregulation and tax cuts are in place and underpin the strong economy.
This coming trading week, over the New Year, will be light but may continue to be extremely volatile. US equities have experienced a huge post-Christmas rally, which is an investment choice, reflected in a fall in US Bond Yields. The interest rate pressure, has been somewhat released, allowing the Dollar to soften. The EUR trades around 1.1400, while the yen heads towards 110.00. Trade exposed currencies have suffered the ongoing trade negotiations between China and the USA. The NZD has fallen below 0.6700, while the AUD struggles to hold the Big figure, 0.7000!?
The final trading week for 2018 and the first trading week for 2019 should be relatively light, but may continue the recent volatility. Major PMI releases across Europe, Asia and the US should provide some ammunition and markets will look towards US employment data for the New Year. Trade negotiations between China and the US were scheduled to last 90 days from the G20 summit at the beginning of December and the process is likely to spark reactions from markets, which will directly impact the commodity currencies.
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