Risk-off market, will the yen continue to strengthen today as well!? ~ Highlights and schedule for December 18 ~
The Dow is starting with a 500-point drop as global stock prices continue to fall. The VIX index and gold prices are rising. The yen and the franc are being bought, reflecting a typical risk-off flow. I think the sharp drop in stock prices is influenced by thin trading volume and profit-taking. After Johnson & Johnson’s recent issues caused stock prices to fall, profit-taking selling may have begun as well. With year-end and Christmas holidays approaching and trading volume shrinking, even a small tilt in positions can move prices significantly.
◎ Today’s Points of Focus
1)Global Stock Decline and Risk-Off
Stock prices have been falling since recently. As year-end approaches, profit-taking seems to be starting. While a technical rebound is possible, it is unlikely to turn markedly higher. This stock decline is driving the risk-off flow. Crude oil prices have fallen below the key 50-dollar level, the VIX index and gold prices have surged, the Australian and New Zealand currencies are being sold, and safe-haven currencies like the yen and the franc are being bought.
The dollar-buying demand mentioned in a previous article around year-end seems to have cooled after mid-December. It will be noteworthy how far the risk-off flow and stock declines continue.
Dollar-yen buying strategy! ~ Bold forecast for dollar-yen this year
2)Reaction Ahead of the FOMC
The December FOMC is priced in for another rate hike. While there is probably no option to hold rates, comments from President Trump and U.S. National Trade Council (NTC) chairman Narvarro are turning against hikes. Speeches and headlines can influence the forex market. While a sustained trend may not form, in a thin market with light trading, prices can swing dramatically. I want to be mindful of risk management.
◎ Today’s Event Schedule
12/18 (Tuesday)
09:30 AUDRBA Board Meeting Minutes・Interim Economic and Fiscal Outlook
18:00 EUR Germany IFO Business Climate Index
22:00 HUF Hungary Policy Rate Announcement
12/19 (Wednesday)
06:45 NZDCurrent Account
◎ Weekly Schedule
