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Risk Aversion Builds Pace, Pound Faces Volatility on UK GDP Data

Risk Aversion Builds Pace, Pound Faces Volatility on UK GDP Data

John Kicklighter, Chief Strategist

Talking Points:

• Last week's equity bleeding has carried through the weekend with a Dow dropping to a 6-month low

• Full scale and lasting risk aversion represents a deep well of untapped potential and deserves a plan

• Meanwhile, more distinct in market influence and timing is Tuesday's top event risk: UK 2Q GDP

Find out what scheduled event risk can threaten your trades or trigger volatility with the DailyFX Economic Calendar.

The drop in global equities and other sentiment-sensitive assets (including Yen crosses) continued into the new trading week. Further adding to the growing unease among speculators, the intensity of selling seems to be picking up. The Dow crossed an important threshold with a close at six-month lows and China's benchmark equity index saw its biggest one-day drop in seven years. There is plenty of untapped potential should a global deleveraging effort unfold...and there is an incredible depth of risk. Meanwhile, the data-driven highlights for the week will start up in earnest in the upcoming session with the release of UK GDP. Certain pairs represent a convoluted scenario - like GBPUSD with the FOMC decision due the next day - and are less favorable trade candidates. However, there are also those that will offer a straightforward fundamental read with high profile technicals like GBPNZD. We look at theme, event risk and trade potential in today's Trading Video.

EQUITIES ARE UNDER PRESSURE GLOBALLY

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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