The big news so far today is that Fitch moved to cut US' credit rating from AAA to AA+ here. It's one for the record books as the last time this happened was 12 years ago. The natural reaction seems to be one of fear with stocks being marked down, but I shared some thoughts here about how this time around it might be different.
One spot I'm really liking is gold as it holds around the lows from last week near $1,942.50 and is now trading back up to near $1,949 on the day. There are still some technical challenges for buyers to reestablish themselves but I still favour the structural view on gold considering that major central banks are starting to pivot away from tighter policy.
Besides that, we've finally gotten that AUD/USD drop to 0.6600 with the lows today now touching 0.6580-90 - the lowest in two months. That may set up a test of 0.6500 next but the risk-reward of staying in shorts and chasing a further downside move isn't too favourable I would say. It's a good place to scale out after the drop from 0.6900 since mid-July.
The US jobs report on Friday is going to be a key focus and that could be one that impacts USD/JPY and Treasury yields heavily once again. The ADP employment data today will provide a bit of a teaser (not in terms of what it represents, but the market reaction perhaps) so just be mindful of that.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
