A flash crash in the currency market sent the USDJPY down to 106.55, and AUDUSD down to 0.6775 in just five minutes, hitting 10-year lows against the yen and the dollar. The flash crash was blamed in part on algorithmic trading during an illiquid market. Japanese traders were on holiday, while the United States market had closed for the day.
Shares fell in Singapore STI, and the Shanghai Composite index was flat, while Hong Kong’s Hang Seng was down 0.26%. The Australian benchmark S&P/ASX200 index closed higher 75.6 points, or 1.36 per cent, to 5,633.4. The broader All Ordinaries was up 69 points, or 1.23 per cent to 5,694.6. Japan’s markets were closed.
European shares fell in early European session as Apple lowered its first-quarter revenue guidance to $84 billion, down from the $89 billion to $93 billion that had previously been forecasted. Dax in Frankfurt gives up 0.68% to 10507, CAC40 down 0.60 to 4653 and in London FTSE fall 0.68%. German Economy Minister Peter Altmaier said in an interview published Thursday that the U.K.’s withdrawal from the European Union poses an economic risk, although he added that he expected growth in Germany to continue.
On the Lookout: Looking ahead, the US ISM manufacturing index, ADP employment report, Challenger job cuts, construction spending, motor vehicle sales and weekly jobless claims data will be released later today.
Analysts at TD Securities suggest that the US ISM Manufacturing is expected to edge lower in December, and they are looking for the index to decline to a below-consensus 57.3 from 59.3 (market: 58.0).
“ADP Employment for December will be published at 8:15 ET with the market looking for job growth to edge lower to 180k while December auto sales will round out the data flow, with consensus looking for sales to slow to a 17.2m annualized rate.”
Trading Perspective: A flight to safety following the series of negative releases since the turn of the year saw the rush into the yen early morning. The USDJPY now seems to have formed a temporary base near the 106.90 level. The yen continued benefitting from the global flight to safety amid heightened worries about the global growth, further fueled by a rare revenue warning from Apple.
USDJPY recovered some of its early lost ground to over nine-month lows, albeit struggled to make it back above the 108.00 round figure mark. Technical indicators on hourly charts have just started moving away from highly oversold zone but remain well within the bearish territory. Bears will lose control only if the pair manages to regain 109.71, yesterdays daily high, a figure far away from current levels.
EURUSD traded deeply into the red territory on Wednesday in thin liquidity, charting at the same time a bearish engulfing candle and opening the door for further loses in the short-term horizon. In the hourly chart, yesterday’s sharp selloff halted just ahead of the critical support at 1.1300 level. In late Asia session, the pair found fresh buyers and is now posting some decent gains in the 1.1372/78 band. Despite the mild rebound so far, the pair is poised to remain under pressure, as bears took control, and a break above the 50-day moving average at 1.1378 needed to attract some buyers.
GBPUSD tries to recover from the flash crash in the Asian session at 1.2439. The technical picture just got worst today as the price hits two weeks low and is trading below the majors daily and hourly moving averages. Karen Jones, analyst at Commerzbank, points out that GBP/USD pair’s correction higher baulked at the 55-day MA at 1.2802 and this resistance is reinforced by the 2018-2019 resistance line at 1.2843. The emphatic rejection of the market has seen an erosion of 1.2479/77 – the lows charted in mid-December. We have a new low of 1.2444; the move looks overstretched and has not been confirmed by the daily RSI, and we would allow for some near-term consolidation. Below 1.2444 targets the 78.6% retracement at 1.2109.”
Gold still attracts buyer’s interest and is trading close to 6-1/2 month tops, set earlier today. The precious metal built on its recent positive momentum and was off to a good start in 2019. The ongoing up-move to the highest level since mid-June remained supported by growing worries about a sharp global economic slowdown, which propelled demand for perceived safe-haven assets, including gold.