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Video: Another Risk Swing Drops the S&P 500, USDJPY Next?

Video: Another Risk Swing Drops the S&P 500, USDJPY Next?

2014-09-26 03:46:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

• A rebound in sentiment was short lived with global equities dropping and volatility jumping Thursday

• With this lastest hit, the risk unwind spread more readily to other markets

• Should conviction build on investor sentiment, big moves for stocks and USDJPY lie ahead

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Selling in riskier asset classes resumed this past session, and the sentiment proved more infectious. But, at what level of risk aversion does this become a reinforcing cycle? With conviction, there is a vast discount on the build up in complacency that will quickly collapse on the market. The S&P 500 is a good benchmark of both sentiment in the financial system as well as the elements of complacency. On the FX side, the Yen crosses remain the best target of a shift in winds and the USDJPY is quickly adding to its risk fo reversal. Meanwhile, the cracks in financial market calm may be encouraging competition amongst officials to manipulate their currencies for advantage. We are in the midst of threats or active efforts to drive the Yen, Euro, Dollar and New Zealand Dollar. We take a look at individual opportunities and big trends in today's Trading video.

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