Walid Salah Eldin
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The volatility in the equities markets could ease down in the coming days after violent movements in the recent few days.
The equities traders were looking for such required major correction, after years of low volatility and continued sold pace of rising with minimal profit taken actions.
The higher interest rate outlook in US could trigger this major correction, after last Friday US labor report of January had shown growing of the wages inflation pressure can make the Fed in rush to raise its fund rate next month.
As The Average Hourly Earnings rose yearly in January by 2.9% which is the highest scale of rising since June 2009 and the same reached rate last September on the back of last summer hurricanes.
The FOMC has highlighted in its economic assessment last week its higher confidence in the economic activity and in the inflation ascending ability to reach the Fed's 2% yearly goal, after passing Trump's reflation plans for tax overhaul and after The committee has been referring to the lower than expected inflation rate in US in its previous assessments.
The correction in the US stocks market to the current extent is not expected to form worry from the Fed to take action or change its language, as it has criticized previously taking unwarranted higher risks and warned about the equities low volatility, as it can have negative impacts on the financial stability.
This major correction in US stocks market which prompted sell off in the global equities markets drove the demand for US treasuries up severely sending UST 10yr yield down to 2.6459% from 2.8812% which has been its highest reached level since 2014 following the release of Jan US labor report.
UST 10yr yield stabilized for trading now near 2.76%, after yesterday rebounding of US blue chips stocks, while the future rates of US major equities indexes are pointing to dovish opening today, after Dow Jones could gain back yesterday 567.02 points.
There was no major direction in the Forex market but just what can be named limited reactions during this major correction comparing with what has happened until now in the Equities markets.
As there was no signs of changing the interest rates outlook as the main street is still running well and it is still has the same bullish potential away from what is running in Wall Street which can be only named until now a major correction.
So, The markets are still pricing in higher borrowing costs to come and faster inflation rates despite of this steepest drop in US equities since August 2011 with no more worries to fuel this correction.
The future rate of S&P 500 rebounding could not get back yet a place above its daily SMA50, while it is still showing ability to reside above its daily SMA100, after bouncing above its daily SMA200 by bottoming out at 2532.17 yesterday.
After relatively short-lived trading below its daily SMA200, The downside momentum eased down but the volatility can controlling the index movement.
The future rate of S&P 500 is still well exposed to forming lower high below its peak on last Jan. 29 at 2877.21, while it is trading now in its seventh consecutive day below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 2978.98.
The index daily RSI-14 is referring now to existence inside its neutral territory reading 39.069, after rebounding inside its oversold area below 30.
USDJPY daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside its neutral region at 35.734 leading to the upside its signal line which is lower in the same region at 22.027, after bottoming out also inside its oversold area below 20.
Important levels: Daily SMA50 @ 2722.20, Daily SMA100 @ 2640.68 and Daily SMA200 @ 2540.49
Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
The equities traders were looking for such required major correction, after years of low volatility and continued sold pace of rising with minimal profit taken actions.
The higher interest rate outlook in US could trigger this major correction, after last Friday US labor report of January had shown growing of the wages inflation pressure can make the Fed in rush to raise its fund rate next month.
As The Average Hourly Earnings rose yearly in January by 2.9% which is the highest scale of rising since June 2009 and the same reached rate last September on the back of last summer hurricanes.
The FOMC has highlighted in its economic assessment last week its higher confidence in the economic activity and in the inflation ascending ability to reach the Fed's 2% yearly goal, after passing Trump's reflation plans for tax overhaul and after The committee has been referring to the lower than expected inflation rate in US in its previous assessments.
The correction in the US stocks market to the current extent is not expected to form worry from the Fed to take action or change its language, as it has criticized previously taking unwarranted higher risks and warned about the equities low volatility, as it can have negative impacts on the financial stability.
This major correction in US stocks market which prompted sell off in the global equities markets drove the demand for US treasuries up severely sending UST 10yr yield down to 2.6459% from 2.8812% which has been its highest reached level since 2014 following the release of Jan US labor report.
UST 10yr yield stabilized for trading now near 2.76%, after yesterday rebounding of US blue chips stocks, while the future rates of US major equities indexes are pointing to dovish opening today, after Dow Jones could gain back yesterday 567.02 points.
There was no major direction in the Forex market but just what can be named limited reactions during this major correction comparing with what has happened until now in the Equities markets.
As there was no signs of changing the interest rates outlook as the main street is still running well and it is still has the same bullish potential away from what is running in Wall Street which can be only named until now a major correction.
So, The markets are still pricing in higher borrowing costs to come and faster inflation rates despite of this steepest drop in US equities since August 2011 with no more worries to fuel this correction.
The future rate of S&P 500 rebounding could not get back yet a place above its daily SMA50, while it is still showing ability to reside above its daily SMA100, after bouncing above its daily SMA200 by bottoming out at 2532.17 yesterday.
After relatively short-lived trading below its daily SMA200, The downside momentum eased down but the volatility can controlling the index movement.
The future rate of S&P 500 is still well exposed to forming lower high below its peak on last Jan. 29 at 2877.21, while it is trading now in its seventh consecutive day below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 2978.98.
The index daily RSI-14 is referring now to existence inside its neutral territory reading 39.069, after rebounding inside its oversold area below 30.
USDJPY daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside its neutral region at 35.734 leading to the upside its signal line which is lower in the same region at 22.027, after bottoming out also inside its oversold area below 20.
Important levels: Daily SMA50 @ 2722.20, Daily SMA100 @ 2640.68 and Daily SMA200 @ 2540.49
Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
