Crude Slides Due to Risks in Emerging Markets
The dollar climbed the most against its peers since May of last year, as the feeling of Fed tapering was very strong. With the U.S. Fed cutting economic stimulus, this has increased the demand for haven currencies such as the U.S. dollar. The simple fact is that the greenback has surged due to the flight from risky assets to haven ones. Traders are simply bullish on the USD.
The European single currency was by far the biggest loser during Friday’s trading session. Investors simply did not feel like investing when it came to the EUR due to the risk it entailed. In fact, the economic situation in the Eurozone is dire. Moreover, key policy makers have failed to come up with a solution to boost the region’s economies. Therefore, traders may still continue to be cautious with the European single currency during Monday’s trading session.
When speaking of the strongest currencies currently, the yen seems to come to mind. It is important to understand that the Japanese currency was previously oversold. However, traders have taken the opportunity to go long on it. The most impressive advances on Friday were versus the dollar and the euro. It is likely that they will continue making inroads into its main peers in the next few hours.
Stocks on Friday slipped notably, as the fears with regards to Fed tapering turned traders off. Also, there is the feeling that equities were overvalued in previous trading sessions. Therefore, the losses which we saw were not a surprise. However, there were many investors who did lose a lot of money.
The Dow Jones made big losses of 0.94 percent to 15,698.85. The Nasdaq Composite Index dived 0.47 percent to 4,103.88.
Facebook did manage to climb during Friday’s trading session. However, Bank of America ended up making very big losses.
You will want to be extra cautious while opening positions in U.S. equities during the U.S. session.
There was a big selloff of risky assets such as crude oil at the end of the previous trading week. In fact, the black gold slipped from its highest level in 2014. This came on the concern that the developing economies may contract. The commodity ended Friday’s trading session much lower by 0.8 percent. Instead, traders took it upon themselves to put their money into assets which carried with them less risk. Among the reasons for the bearishness was on the Federal Reserve cutting economic stimulus and the slowing Chinese economy. More losses are like for crude oil today.
One of the benefactors of a lack of risk taking on Friday was the gold binary option. Traders decided that it was the right time for them to buy into the commodity due to the very high returns which it offered global traders. In addition, gold underperformed previously, so traders were of the view that the only direction which gold will go is higher. Traders look to go long on gold yet again.
One of the most bearish currencies to invest in at the moment is the EUR/USD pair. Investors are of the view that they should continue ditching the pair in the hours ahead, as there is simply a lack of positive economic data that being published from the Eurozone at the moment. If you want to make some high returns this Monday, then start selling the EUR/USD pair once you get a chance.