News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
Oil - US Crude
Wall Street
More View more
Real Time News
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here:
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your $USDCHF market update from @FxWestwater here:
  • The US Dollar lost ground to most ASEAN currencies as Emerging Market assets climbed despite US economic woes. USD/INR is eyeing third-quarter Indian GDP at the end of the week. Get your market update from @ddubrovskyFX here:
  • The global stock market can be categorized into specific groups or ‘stock market sectors’. Organizing the vast number of stocks in this way helps traders to view assets in a more manageable way. Get your stock market sectors basics here:
  • The Euro looks poised to continue gaining ground against haven-associated currencies and may reverse higher against the British Pound in the near term. Get your #Euro market update from @DanielGMoss here:
  • Gold and silver prices have come under significant pressure recently. However, this correction lower could prove short-lived as price analysis hints at a reversal higher. Get your $XAUUSD market update from @DanielGMoss here:
  • The S&P 500, Dow Jones and crude oil prices have recently made critical advances to the upside. Is retail positioning supporting the case for further upside momentum?
  • An improving economic backdrop is bolstering crude oil prices and in turn, the Canadian Dollar. Still, the risk-sensitive Australian Dollar continues to move higher. Get your market update from @FxWestwater here:
  • Gold Price Forecast: Dovish FOMC Could Underpin Bullion Ahead of NFP - #Gold #XAUUSD $GOLD $GLD
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.42% 🇦🇺AUD: 0.35% 🇳🇿NZD: 0.30% 🇨🇦CAD: 0.20% 🇯🇵JPY: 0.16% 🇬🇧GBP: -0.33% View the performance of all markets via
Follow Aggregate Dow, VIX, Dollar Risk-Off, Not One-Day Drops

Follow Aggregate Dow, VIX, Dollar Risk-Off, Not One-Day Drops

2018-02-09 03:25:00
John Kicklighter, Chief Strategist

Talking Points:

  • The Dow and S&P 500 put in for their second worst day since Brexit while their weeks are now the worst in nearly seven years
  • Lasting trend reversals - especially thematic as in 'risk' - don't happen with just single-day losses but cumulative pain over time
  • Technical appeal in Dollar, Yen, Aussie and Kiwi Dollar crosses should be paired to sentiment for trade opportunities

What makes for a 'great' trader? Strategy is important but there are many ways we can analyze to good trades. The most important limitations and advances are found in our own psychology. Download the DailyFX Building Confidence in Trading and Traits of Successful Traders guides to learn how to set your course from the beginning.

Dow and S&P 500 Revive and Pace Fear

The selling pressure that was so intense to start the week for equities and other risk-sensitive assets was revived this past session. US indices once again paced the bearish slide. Though there were declines registered in sessions earlier in the trading day, the afternoon New York hours provided another painful escalation of risk aversion. Through the end of the day, the Dow 30 and S&P 500 dropped back 4.2 and 3.9 percent respectively with both closing at levels last seen back in November. While these benchmarks' losses were not as intense as the market quake registered Monday, these are arguably even more troubling developments. Rather than fall back on the assumption that the panicked selling to start the week was a flash in the pan that exercised all of the speculative demons, have greater commitment to an unfavorable trend and considerable pace to back it up.

Follow Aggregate Dow, VIX, Dollar Risk-Off, Not One-Day Drops

Breadth of Risk Aversion and the VIX

Of course, if we intend to evaluate the sentiment of the entire financial system; a reference to a singular region's equity market simply won't do. Global shares have extended their own pain often with far less relief in a bounce than what the State-side sign posts afforded. The DAX and FTSE100 have speak to different intensity trends while the Nikkei 225 is threatening to dive back below 21,000. Other asset classes offer a similar verdict of a slippery slope in confidence. The EEM emerging market ETF posted a critical trend break with yesterday's dive while the HYG junk bond ETF continue to unfold its head-and-shoulders reversal. Perhaps one of the most important measures to watch moving forward is volatility. The VIX is on pace to rise 200 percent this week - a record that easily outpaces the peak of the Great Financial Crisis. This has in turn created problems for the popular derivatives (futures, options, ETNs) that have be based on this index. There have been claims of trillions of dollars of capital tied up into this asset class which I find dubious. However, where used as a hedge or portfolio leg; rapid unwind of the 'safety end' of a portfolio bodes poorly in genuine risk aversion.

Follow Aggregate Dow, VIX, Dollar Risk-Off, Not One-Day DropsFollow Aggregate Dow, VIX, Dollar Risk-Off, Not One-Day Drops

FX Will Take Up the Speculative Call

We have already seen a number of currencies align to their risk bearings over the past weeks. The Australian and New Zealand Dollars have both lost significant traction in the aftermath of their respective central bank decisions. Both the RBA and RBNZ have voiced a more dovish outlook which in turn further diminishes the speculative appeal of once-famed carry currencies. Add to that a general withdrawal from carry, and these underperformers are naturally the first to go. More reticent to rollover, the Yen crosses have finally slipped through the bullish leaning congestion of the past months. My focus will be on the EUR/JPY, GBP/JPY and AUD/JPY; but be wary of USD/JPY. The Dollar has been slow to pick up, but its haven status is unequaled when the question is absolute liquidity. If this concerted turn in speculative exposure continues, the Dollar is likely to drive EUR/USD back below 1.2175/35.

Follow Aggregate Dow, VIX, Dollar Risk-Off, Not One-Day Drops

Sentiment Tends to Sort Competing Themes

There are no doubt other fundamental threads running through the market; but when not superseded by risk, they are often distorted by the systemic fear. In the case of the Pound, the Bank of England's surprise hawkish outlook heartened bulls for a short while; but the concern of Brexit and the uncertainty it bears on the Sterling ultimately checked the market. The Swiss Franc continues to build its overlooked strength on pairs like EUR/CHF with a wide bid across the majors. Is this a return to traditional tendencies. Even the Chinese Yuan needs to be evaluated on this level. Either the market is pulling back from Chinese exposure for the risk it poses, or supranatural forces have turned USD/CNH on purpose amid questions of intent and stability. We discuss all of this and more in today's Trading Video.

To receive John’s analysis directly via email, please SIGN UP HERE

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