It has been a wild start to the day on forex markets, after what has been described as another flash crash.
In early Asian trade, the JPY pairs all started crashing lower, with most down 3-5% over the course of a few minutes. The exact cause of the crash is still unknown, however, the moves came on the back of concerns around China and a soft market update from AAPL.
Apple downgraded its guidance and its margins have dropped slightly, on the back of a weak sales period for the latest iPhone. Apple CEO Tim Cook put some of the blame on China and that added to the clear risk-off mood in the air.
The news comes on the back of a weaker than anticipated PMI print, that hurt markets again yesterday.
The AUD/JPY was the big mover and it fell heavily, before paring some of the losses as we can see on the chart below.
There is plenty of tension around as a result, and today’s US session will not be one to be missing. The ES Futures are already pointing to a drop of more than 1% on the back of the AAPL earnings update and the flash crash is sure to spook forex markets and add to the increased levels of volatility.
We also have the first look at US employment with the unofficial ADP numbers, which are of course a lead in to the main event tomorrow.
Forex Signal Update
The FX Leaders Team have had a really strong start to the year, grabbing seven straight winners yesterday.
Oil – Pending Signal
Oil was one of the strongest performers yesterday against a backdrop of the longer-term downtrend. Commodities generally trend and trend hard, so the best course of action is to always use these types of pullbacks to find good opportunities to short.
Bitcoin is slowly but surely grinding higher at the moment, however we are still lurking below the $4,000 level.
As mentioned yesterday we are still making lower lows beneath $4,400 and $4,200 respectively.
Even if we test $4,000, we are still technically in a downtrend and I wouldn’t be looking to go long unless we seriously challenge all of those levels on increasing volume.