IF a word could describe the situation in the markets the last 2 days, that word would be chaos. Financial markets are experiencing a global sell-off which has seen trillions of Dollars in value lost worldwide. The selloff is sparked again by FED chairwoman’s Janet Yellen careful remarks on the implications on the US economy stemming from the global slowdown and low oil prices. Yellen’s remarks suggested the Fed could delay its planned interest rate hikes amid the undergoing turmoil in financial markets. As a result, some highlights and points to consider if you are planning to trade. This was the worst week for USD since the Lehman crisis as investors seek relative safety buying gold and dumping stocks.
- GOLD: Rose $60 in a day, out of which $15 in 2 minutes just a while ago. With key central banks easing monetary policy and the Fed may delay its rate increases, non-interest gold is likely to resume its rally.
- JPY: By far the biggest mover these last two days. USDJPY dropped from 115.08 to 111.09 and amid speculation that the Bank of Japan will intervene to stabilize markets, IT skyrocketed to 113 in 5 minutes and dropped to 112 within next minute.
- OIL: New yearly lows after indices tanked. OIL dropped 8-9% in 2 days reaching $26.22 per barrel.
- STOCKS: European shares slumped to lowest level since 2013 while Hong Kong’s Index fell to its worst start after Lunar year since 1994 as trading resumed this week.
Due to the swiftness and relentlessness of some of the forex moves, forex dealers and traders remain on high alert in anticipation of an intervention threat by Central Banks, in particular the BoJ and Swiss National Bank.
There has never been a more risky time to trade, however we have seen also many long term gold traders capitalize on positions they took months ago. The opposite is true for traders who were looking to pick the bottom in oil prices. As Bernard Baruch once said, “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars”. Our tip: Take care of the risks and the profits will come by themselves.
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