Yesterday’s session was characterized by a full-blown sell-off, as economic data and troubling news from European economies hit investor’s confidence. The S&P500 sky-dived at the start of the session and closed with a loss of -3.11%. The Nasdaq finished with a -2.99% loss.

The selling pressure began prior to the U.S session as European countries’ conditions, such as Greece and Spain battered sentiment. Investors exited the markets after disappointing bond auction results, sending yields soaring and the indices lower. In addition Spain raised its budget deficit forecasts, while Portugal’s CDS spreads hit an all time high.

Two interest rate decisions were released yesterday, one from the ECB and the other from the BOE. The Bank of England left its benchmark interest rate unchanged, and also decided to pause with its quantitative easing. The monetary committee paused with its $317 billion bond-purchase program, although officials mentioned that they could resume with their quantitative easing, should the economic recovery fall short of expectations.

The ECB also left rates unchanged at 1% and presented a similar statement to their prior one. According to analysts, the ECB will not raise rates this year as members of the ECB are still dealing with a major recession and high deficit.

The major U.S event of the day was their initial jobless claims, which edged higher to 480.00k vs. an expected 455.00k. This was the highest number in seven weeks.  One must note that this was following a better than expected ADP Non-Farm Employment Change, which dropped less than expected by -22.00k. Economists were expecting a -40.00k figure.

On the U.S market, stocks were battered at the start of the session as Energy and Financials led the way lower. The VIX, a measurement of volatility, soared higher yesterday after breaking its bullish flag. This chart was recently posted on the chart of the day. The index soared higher by over 20% and closed just above its 200 daily moving average.


 

Forex Pairs Plunge – Stop Losses can be shifted

Over the last couple of days a few different scenarios have been posted on this site. Due to the yesterday’s occurrences, the Dollar index soared higher and touched a new year-to-date high, above 80 points.

On individual pairs the EUR/USD dropped lower and wiped out nearly 200 pips, while the USD/CAD continued to climb on Dollar strength. Regarding recent posts, the AUD/USD dropped below support, while the EUR/AUD presented intraday strength and climbed further away from its weekly support – Stop-Losses can be shifted on positions to prevent loss.

Silver also plummeted, breaking its trend line support.

Wednesday’s chart of the day – Silver Daily Chart
 

Thursday’s reaction to the European Problems

Market Data to Watch Out For

When it comes down to the first Friday of each month, market participant know that anything can happen. The famous market-mover, the NFP result is scheduled to be released today and could present dramatic intraday movement. Even though analysts are expecting a healthier outlook, with the NFP up by 20k and the unemployment rate unchanged. The positive job growth could be positive, especially after last month’s revised numbers showed a 4k job growth. In any case, whatever the number is, the intraday session should be quite volatile.

To view the full economic calendar click here.

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