Market Summary for 20/8/2015
Aug 21, 2015
Yesterday saw further strong movements in global markets. The day begun with Asian equities continuing lower, which begun to pick up steam with further sell-offs in European and US equities market as the S&P 500 index closed at its lowest level since May. Treasuries climbed higher while usd/jpy fell below 123.5 in the risk off environment. Doubts about a September rate hike by the Fed turned into outright pessimism with oil staying lower while equities joined the rout amid concerns over global economic growth. The US dollar fell sharply, with eur/usd breaching and then closing around 1.12, while gold rose nearly $20 an ounce to close at $1152.
Key risk events today: China Caixin PMI, German consumer confidence, Canadian CPI, US Markit PMI
Despite the sharp losses in the US dollar over the past two days, the trend does not seem likely to reverse, being supported by declining expectations of a September lift-off. Short of a blunt statement from the fed committing to a rate hike or stabilising global markets with a firmer macroeconomic outlook, the US dollar is likely to stay depressed. Equities seem to be leading recently, with any further sell-offs likely to drive the current trends to new territory.