Markets on Tuesday: As Markets Crash Will We See Flight To Safety?

What a massive day on markets! After the slow melt-up in stocks that we’ve seen for months (if not years), it seems that times are changing. US stock markets plunged on Monday with the Dow and S&P 500 both copping a hammering.

The SPX was down 4% with futures even falling even further. At the same time, the USD found some strength. That meant the majors were relatively weak in comparison. There are fears of rate hikes in the US, which is justifiable. However, high rates don’t mean that stocks crash. Like I said yesterday, stocks have generally risen when we’ve had rising rates.

But the interesting mover yesterday for me was the Yen. The USD/JPY fell in line with the fall in stocks. Indicating that the JPY might be the safe-haven currency of choice.

At the same time, we saw the cryptocurrencies get absolutely annihilated. Bitcoin (BTC) was down 20% and as of this writing we are testing 7000.

On the forex front, it’s RBA day. I suspect little will come of it, however, given the environment the AUD/USD might be poised to sell-off further.

USD Holding Up

The USD has been strong on the back of the stock market crash. The talk is all around interest rates rising. Which is bullish for the USD.

As I mentioned yesterday I see the USD in a period of stabilization and getting some strength back. At the least no selling off. We are testing upper resistance right now and I think we will push back to 90.00 in the near future.