 Risk aversion has firmly gripped the markets, leading to the steepest selloff in US stocks since 2022 overnight. This sharp decline continued into the Asian trading session, with Nikkei plunging nearly 3%. The market rout is further exacerbated by a broad decline in base metals, oil, and even cryptocurrencies, signaling a widespread flight to safety. Amidst this backdrop, Japanese Yen's rally appears unstoppable. Yen, along with Swiss Franc and Dollar, are benefiting from their status as safe-haven currencies. Conversely, commodity currencies such as the Australian Dollar are bearing the brunt of the selloff, sinking to the bottom of the performance charts. Euro and British Pound are faring relatively better, positioning themselves in the middle of the pack. Today's key economic focus is US Q2 GDP advance report, where growth is expected to pick up to 2.0% annualized from Q1's 1.4%. This anticipated increase is attributed to resilient consumer spending, which has persisted despite inflationary pressures and high borrowing costs. However, there are concerns about how long this resilience can last, especially as pandemic-era savings dwindle. A lower-than-expected GDP reading could strengthen the case for Fed to implement two interest rate cuts this year. Yet, it's uncertain if the markets will maintain the trend of interpreting "bad news as good news.".... |
