US Market Wrap: A dash of risk aversion jitters ahead of FOMC meeting
- Australia: Consumer Inflation Expectation 0100 GMT
- Nothing of note
A scent of the risk aversion that was evident in Asia and Europe wafted around throughout the New York day as well. That led to a healthy drop in US equity indices and even news of the $26.2 billion offer from Microsoft (MSFT: NASDAQ) for LinkedIn Corp (LNKD: NYSE) didn’t improve sentiment. That may be because traders remember how well Microsoft’s Nokia acquisition went.
Forex markets were fairly choppy, led by Sterling. GBPUSD was the best performing G10 currency during New York trading, rallying from $1.4126 at the open to $1.4335 by mid-morning. That level didn’t hold, and GBPUSD bears smacked the pair back to just $1.4197. It then rallied in afternoon trading and closed at $1.4235. Brexit polls were behind the moves, as usual.
EURUSD was volatile as well. It opened with a bit of a bid, then got whacked falling from $1.1277 to $1.1238. That move was quickly erased when EURUSD shot back to $1.1311.
USDJPY rallied from the open until option expiry at 1000 hours in New Yorrk (1400 GMT) and then gave back most of those gains. However, the selloff was shortlived and USDJPY drifted higher for the rest of the day.
The common themes in the currency markets was nervousness from sinking but volatile oil prices and concern ahead of the FOMC meeting due to take place on Wednesday afternoon.
Oil prices sank, climbed and then sank again, wreaking havoc in forex and equity markets. WTI dropped to $48.15/barrel by mid-morning and then gushed higher to $49.26/b on supply concerns about Nigeria. That move ran out of steam and WTI drifted down until the end of the day.
Britain's EU referendum is a mere nine days away. For a great recap of the issues and poll results, check out this article from Saxo Bank Deputy Editor Clare MacCarthy: Saxo on Brexit: Britain enters the final lap
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– Edited by Robert Ryan
Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.
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