Stock Markets Plunge Once Again; FX Remains Remarkably Stable
As mentioned yesterday, the key to financial markets remaining stable after Monday’s brutal sell-off was for the lows to hold up and create some calm for participants. However, within a couple of hours of the European open, stocks indices broke their previous day’s low, producing more panic across the globe. FX markets remained rather calm, the greenback took a hit, while safe-haven currencies thrived. The pound made a strong move back above $1.30 which helped the GBPEUR rate push nicely into the €1.19 handle.
As US traders and dealers arrived at their desks, greeted with the sight of more selling, they chose to do the same. By the close of play, the broadest index of US public companies had put in its first back-to-back 3% down days since 2008! No doubt, markets will be incredibly volatile heading into Wednesday’s trading session. The currencies to watch out for in the case of more risk-off flows will be the Japanese yen, Swiss franc, British pound, and euro.
On the data front, it’s another light day. The main focus will be around a speech from European Central Bank President, Madame Lagarde. We’ll also see US new home sales as well as oil inventories. Buckle up – it should be another exciting day.
Written by Viv Savani. 8:58am, February 26th 2020
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