Markets Look to Yellen as S&P 500 Tries to Hold, Euro and Yen Rally

10 February 2016, 07:33
Mohammed Abdulwadud Soubra
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Markets Look to Yellen as S&P 500 Tries to Hold, Euro and Yen Rally


 Talking Points:

• The S&P 500 is slipping at major support while both the Yen and Euro as funding currencies rally

• USDJPY has extended its 'neckline' break as the Euro strong-arms EURUSD on carry unwind

• Top event risk ahead is Janet Yellen's testimony as traders look for language that could save faltering sentiment

See how retail traders are positioning in the majors in your charts using the FXCM SSI snapshot.

  Investor sentiment is tottering dangerously with the S&P 500 pressured into repeated last-minute saves at its multi-year support, USDJPY extending its break through 116 and Euro showing playing its unusual safe haven role. The uncertainty and value gap underlying the market is nothing new. As shares and USDJPY have leveled off over the past year, other more risk-intensive assets like high-yield, emerging markets and commodities have lost substantial ground. But the conspicuousness from these more conventional and stalwart assets is troubling. The markets seem in need of a steady stream of 'good news' - like the BoJ's adoption of negative rates - just to hold back the crush of deleveraging. Up next, there is talk of a central bank being forced to respond to these unfavorable market developments, and Fed Chairwoman Janet Yellen's testimony before Congress is seen as the ideal opportunity. 

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