Market Drivers February 12, 2018
Small boost from risk on
Nikkei closed Dax -1.99%
Europe and Asia:
It’s been a very quiet start to the trading week in the currency market as majors consolidated near Friday levels for most of Asian and early European trade.
With Japan closed for holiday and no economic data on the calendar across all of the G-11 universe, markets were content to stay still as traders digested the volatility of last week. In Europe, a pop in equity prices helped fuel a small rally in all the risk on pairs, but the gains were modest.
It appears that the worst of risk aversion flows may have passed and FX markets will look to US equities today to see if the rebound in stocks can be sustained, If so, the modest bounce in that we saw in Europe could see some extension with USDJPY targeting the 109.00 as the day proceeds.
USDJPY has been surprisingly resilient over the past several days and even in during the worst of the selling last week, the pair was able to hold above the 108.00 triple bottom support. If investor sentiment stabilizes this week, the pair could make a sustained run towards the 110.00 figure, but given the shocks to the system sustained last week, any serious rally would face stiff selling pressure from trapped longs.
For now, the calm pervading the markets is the first sign of stability we have seen in days.