Global stocks rose from two-month lows at the start of trading today, despite the weakness of momentum and the possibility that US stocks will fall again to the red zone after rising from the biggest sell-off in six years.
European shares started trading firmer today after reaching a six-month low yesterday, prompting investors to go towards US and German bonds, which reflected a steady rise in global yields.
On the other hand, the greenback fell against the Japanese yen as investors were cautious and resorted to safe havens after strong sell-offs in the stock markets, but the strong fall in equity markets was not reflected as heavily in the currency market. Safe havens like the Japanese yen and the Swiss franc were only slightly higher.
The USDJPY dropped to 108.91 daily lows and then back to 109 levels, while the USDCHF continued to rise for the second day in a row, reaching its highest level since January 26 at 0.9402.
At the same time, the dollar index remained stable against a basket of currencies at 89.70, after hitting its highest level in two weeks yesterday at 89.90. While the Australian dollar continued to suffer for the second week in a row after failing to exceed the strong resistance level at 0.8110 to record a near-month low of 0.7834.
Markets will remain focused on US equities as they have been the source of recent market turbulence and the rise in long-term US bond yields to a 4-year high has helped push the stock market lower. And while bond yields pulled back, they still remain high.
Markets today will be watching the Reserve Bank of New Zealand's decision as interest rates are expected to be kept at 1.75%, following better-than-expected labour market data, with employment rising by 0.5% in the last quarter of 2017, and unemployment rate falling to 4.5% - the lowest level since the global financial crisis.
