Markets across Asia went into free fall on Monday, following the same on Wall Street on Friday.
As is always the case on Monday’s, early FX trading, hours and hours before equity futures open for trade, showed the way. In a 6am Sydney time post (4pm US Eastern time Sunday) I noted USD/JPY was already more than 100 points lower than its late Friday level. Weekend index pricing, which is not based on exchange pricing but during events like this can be very helpful, was showing gaps lower also.
US equity indexes fell heavily upon Globex reopening, but have since recovered some of their losses. Regional stocks here in Asia are still heavy.
USD/JPY traded to lows under 145.00 and then recovered somewhat to cover the gap from Friday, trading to a high circa 146.75.
Other major FX followed a similar patterns with minor variation, lower then a gap cover. AUD/USD hit a 5-year low.
As for news flow. US officials said more than 50 countries have contacted the administration to seek trade/tariff talks. This advertising was seen by the market as an attempt to prop up stocks. It was countered by Trump speaking with media on his plane trip back from a weekend of golfing saying on the stock market collapse that sometimes it just has to take the medicine. Trump also said there he would not make a deal with China until the trade deficit was solved. No mention of fentanyl.
Crude dropped under US$60.
Bitcoin dropped under US$78K (other crypto slumped as well).
In other news (see the points above for more detail):
Japanese real wages fell y/y again (February data), the People’s Bank of China set the reference rate for CNY and the weakest, for yuan, since December 3 last year,Chinese State Media, People's Daily, said that China may have room for a Reserve Requirement Ratio (RRR) cut, and an interest rate cut,Data from China showed the PBOC bought gold for reserves a fifth month in a rowJP Morgan and Goldman Sachs boosted up their chances of a US recessionUSD/JPY covered its gap:
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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