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Stocks can actually bleed. That certainly feels odd these days.
The initial reaction to the Fed hasn't been too optimistic even as Powell did not take away the punch bowl from the market. US futures are down heavily today, lower by about 1.5% now as we look towards the start of European trading.
Meanwhile, the dollar is rallying strongly across the board after a weaker reception to the Fed in the aftermath of yesterday's events. The greenback leads the way alongside the yen with the aussie being hammered down by over 1% currently.
Looking at the market reaction, it musn't be forgotten that stocks had been rallying strongly and the dollar has been faltering on all fronts over the past few weeks or so. That also needs to be put into context when digesting the headlines from the Fed yesterday.
I mean, we saw EUR/USD and AUD/USD both post eight days of gains in the buildup and GBP/USD even gained 600 pips from 1.2200 to 1.2800.
A little exhaustion for now may be overdue but the scary part is that what if there is more to the current reaction? That is going to be interesting to find out.
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