A retracement today or a head fake ahead of the weekend?
The sharpest of bounces tend to come when the market is most fearful i.e. a bear market. As much as the turnaround in risk has been impressive two hours ago, it isn't something that changes the overall picture and the events over the past two days.
Currencies are looking in a so-called "risk-on" mood today with the aussie leading gains alongside the kiwi while the yen is the laggard. However, on the course of the week, the aussie is still over 5% down against the dollar as of this moment.
In volatile markets, the battle isn't won in just a day but I would argue that we all have to think about it as a battle over five days and take things each time as they go.
The chaos everywhere continues to ensure that the situation remains fluid and the narratives can easily shift around quickly. The Fed intervening yesterday was a prime example of that and while that helped to turn the tide momentarily, it was ultimately futile.
Today could be a day that the market sees some reprieve after the extremely sharp falls over the past two days but in the grand scheme of things, it would mean little more than a technical retracement - if it even ends up that way that is.
It is still early in the day and with weekend risks to consider, the early bounce today may also prove to be a head fake so just be wary of any shifts in the risk mood today.
These are volatile and unprecedented times, stay safe out there.
