Risk sentiment in markets turned negative yesterday as major stock markets suffered big losses yesterday, and investors turned to the Dollar for safety. Concerns surrounding stock over-valuations saw hedge funds reduce long positions, which triggered a bigger sell-off. The Fed kept rates unchanged and affirmed their accommodative stance until their inflation and employment targets are met. The ECB hinted at possible further interest rate cuts to curb the Euro’s strength, further pushing the Dollar stronger. EM and other risk-sensitive currencies fell against the Dollar, with the Rand losing 1.40% to close at 15.2578. This morning we have the Rand trading even weaker at 15.3050 in line with its EM peers.
Commodity prices slipped as the Dollar firmed, with Gold sitting at $1 838, Platinum at $1 070, and Palladium at $2 312 this morning. Oil is holding reasonably steady, trading a touch softer at $52.57 for WTI and $55.47 for Brent crude.
The DXY has climbed to 90.764 with the Dollar currently trading at 1.2095 against the Euro and 1.3675 against the Pound as the sell-off in stock markets continues in Asia. The Aussie and Kiwi currencies are also weaker against the greenback this morning. The S&P closed 2.57% weaker yesterday, the Nasdaq lost 2.61%, and the Dow fell 2.05%. US futures are currently all in the red while the Nikkei, Hang Seng, and Shanghai are down over 1.5%. The JSE was not spared the rout as the ALSI closed 1.78% weaker on the day. US Treasury yields are firmer, with the 10y at 1.011% and the 30y at 1.768%. Look out for the US Q4 GDP and jobless claims data out later today.