Feb 12th 2016: Gold in Demand as Sell-Off Continues

• Last night saw another sell-off on US stock markets, bringing the total losses for 2016 to over 10% for equities. This has developed as the US FOMC moved to raise interest rates for the first time, but subsequently holding back on apparent fears about the health of the global economy. At the same time, other global bodies taking extreme steps, with the BOJ and Riksbank going deeper into negative interest rate territory. The big winner in this has been the Japanese yen, helped by the dollar retreating. The USD/ JPY and other yen pairs has sold off heavily as a result.

• The dollar index itself has stabilised to an extent, but still maintains a negative bias.

• On commodities, gold has been the big winner amidst the turmoil, with a large advance yesterday. Oil continues to suffer however.

• Elsewhere, the Australasian pairs are on the back foot after holding up well yesterday in volatile trading.

Coming up today: 

• Coming up today we have German preliminary GDP, followed by European Flash GDP at 10.00.
• Following this we have US core retail sales released alongside import sales at 13.30.
• Following this we have preliminary UoM consumer sentiment at 15.00, released alongside FOMC member Dudley speaking at the same time.

Trade Idea: 

• The yen pairs are experiencing selling across the board, but the GBP/ JPY has stood out for the consistency of this drop.

• With more downside potential from here, a good way to play this is a LOWER trade predicting that the GBP/ JPY will close below 161.00 in 10 days time for a potential return of 140%.

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