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Markets Recover Following Yen Flash Crash04 January 2019 by Dave Evans

Morning Report: 07.00 London

Yen pairs are stabilising this morning following the flash crash overnight on Wednesday. Talk of Chinese economic interventions have also helped calm regional currencies. The USD/JPY is rallying for the second day, but remains well below 2019’s dramatic plunge.

The AUD/JPY rallied well yesterday, climbing to erase half of the flash crash losses. Meanwhile, the EUR/JPY and GBP/JPY are lagging other yen pairs in their recoveries.

The dollar index is unchanged so far after a large reversal yesterday following disappointing US ISM Manufacturing PMI yesterday.

The AUD/USD has recovered well from ten year lows, with the opening 2019 losses close to being recovered.

The EUR/USD is on the back foot and remains range bound, while the GBP/USD is on the advance after support levels around 1.2500 held. The EUR/GBP is selling for the second day in a row.

The USD/CHF is continuing its slow retreat, with support at 0.9850 holding for now. The EUR/CHF rallied hard yesterday though as the Swiss franc let off the pace.

The USD/CAD is unchanged after slumping heavily yesterday, dropping below 1.3500 and erasing all the late December gains.

Coming up today

Today we have UK net lending to individuals and services PMI at 09.30.

European CPI flash estimate is at 10.00.

At 13.30, we have Canadian employment Change and the unemployment rate.

The big ticket also at 13.30 is US Non Farm Payrolls, released alongside average hourly earnings and the unemployment rate.

Fed Chair Powell speaks at 15.15.

Trade Idea

Oil prices remain at depressed levels, which makes yesterday’s large reversal on the USD/CAD unusual. This was largely driven by dollar weakness, though with Non Farm Payrolls due today, we could see a recovery in the USD/CAD.

Markets Recover Following Yen Flash Crash

A good way to play this is a HIGHER trade predicting that the USD/CAD will close above 1.3600 in 14 days for a potential return of 212%.

Markets Recover Following Yen Flash Crash