Oil prices are skidding, equities are lower short-term interest rates are ticking lower and the dollar is rebounding, except versus the yen. Feels like a switch to a risk-aversion posture after two days of the reflation trade.
Get used to it kids, it is going to be that kind of year. Since financial markets are discounting mechanisms, the market’s time-frame is always in flux. When news flow is light, traders look to the future and try and see beyond the known. When the news flow is heavy and especially when the headlines are grim, it is hard to maintain that forward-looking focus, making for choppy trading and frayed nerves. That will likely be norm for at least the next six months as monetary policy takes time to work its way through the system and fiscal stimulus is still months away at the earliest.
Order boards have been obliterated bewteen 1.3600 and 1.3730 today so prices could easily swing between these two levels with little opposition near-term. It hardly makes sense to get involved here in the midst of that range.