After a correction in global equities, Asian equities may experience a significant sell-off, following the lead of the United States. The U.S. witnessed a sudden surge in volatility during the New York afternoon trading session, causing the S&P 500 and Russell 2000 indexes to lag behind and attempt to catch up with the big tech-heavy Nasdaq, which had previously underperformed. This price action, lacking a clear catalyst, is likely influenced by technical factors and trading positions, especially in the context of thin liquidity during the holiday season.
Furthermore, the recent risk aversion trend has led to increased demand for the U.S. Dollar, potentially affecting Asian-Pacific FX and rates markets in a similar manner. With liquidity dwindling as we approach the year-end holidays, traders are advised to remain vigilant amid the uncertain short-term market conditions. They will be on the lookout for a clear direction and any potential macroeconomic or technical catalysts that may emerge. As protection seems to be under demand, it is worth watching closely the FX markets and equities for direction amid lack of macro drivers.
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© 2019 High Leverage FX - All Rights Reserved.