Volatility dominates in risk off environment

<p>The risk off theme has dominated the FX markets since last Friday following the spectacular fall in precious metals, which saw the biggest daily decline […]</p>

The risk off theme has dominated the FX markets since last Friday following the spectacular fall in precious metals, which saw the biggest daily decline yesterday since 1980. The yellow metal was off 9.7% on the day, with silver having a larger daily decline of 12%. JPY has seen some solid strength following the comments made by the US Treasury on Friday that Japan should stick with domestic instruments and targets and refrain from currency devaluation which I guess means that buying JGBs is fine but buying foreign bonds is not, which I guess is a warning ahead of the G20 meeting as currently this is exactly what Japan are doing.

The commodity currencies have taking a solid beating following the demise in metals and poor Chinese data with the RBA minutes last night revealing no change with their ‘wait and see policy’ reminding the market that they have room to cut whilst they gauge the positives from the last cut sighting the AUD remains strong.

The shocking scenes from Boston overnight sent the market into freefall, with the JPY being traded as the safe haven currency and USD/JPY making an overnight low of 95.77 but with the equity markets finding a base, we have seen a decent retracement as we trade back to 97.80 as I type.

Today is all about CPI day in the UK and US, along with industrial production and housing data from across the pond, with the ZEW survey from Germany at 10am this morning.



Supports 1.3020-1.3000-1.2910 | Resistance 1.3120-1.3170-1.3250


Supports 95.80-95.20-95.00 | Resistance 98.30-99.10-100.00


Supports 1.5250-1.5180-1.5025 | Resistance 1.5385-1.5450-1.5500

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.