Asian markets are down on Thursday, following Wall Street's negative sentiment.
In Japan, the Nikkei 225 dropped 1.81 percent by 9:43 a.m. HK/SIN, weighed by a surge in the safe-haven yen. Australian ASX declined by 1.28% as Australian data about the employment rate went well above expectations, which in turn supported the currency. The Chinese markets were also in red territory. Shanghai composite declined by 0.32%, and Shenzhen composite by 0.24%.
The New York Times report, released on Tuesday, was later confirmed by NBC News. It states that US President D. Thramp has held a conversation with the former FBI director to end the investigation of former Defense Adviser Michael Flynn.
These news affected positively on hedging instruments such as yen and gold and were heavily negative for indices and stocks.
The US indexes closed down significantly yesterday. DJIA dropped 1.78% (372 points), S & P (1.82%) and Nasdaq (2.57%).
The dollar index, measuring the strength of the US currency, went below the key level of 98.
Economic calendar for the European and American trade sessions
11:30 UK - Retail sales
15:30 USA - Initial jobless claims
15:30 USA - Philadelphia fed Manufacturing index
15:30 Canada - Foreign securities purchases
20:00 EU - ECB President Draghi speaks
USD - The US currency has been hit hard in the last few days. This is mainly due to the speculation that the Fed will not be able to raise the interest rate twice this year. Also, the turmoil of investors to Trump's office is growing. We currently remain negative to the US currency.
EUR - The euro is among the strongest currencies on the market. The uncertainty surrounding the French elections has now passed and looks at the ECB and M. Draghi. Today, the President of the ECB will have a press conference at 20:00 where we will watch for guidance on when QE will be reduced. We remain positive to EUR.
CAD - The Canadian dollar continues to rise in view of rising oil prices. The correlation between the two instruments is strong. While oil prices are rising, we remain long in CAD.
Indices - Indices collapsed on Wednesday. Which in turn allows us to take on new long positions unless this is not the beginning of the long-awaited bear market. We need to be careful and keep an eye on the developments around the Trump's office. If next Wednesday the former FBI director proves that Trump has forced the termination of Michael Flynn's investigation, we can expect a large volatility and a decline in US indices.
Trader Bozhidar Arabadzhiev
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