S&P 500 index closed lower but buyers managed to hold off a close below the 200-day moving average
Markets were in a risk-off mood yesterday but ultimately ended the trading day on more stable footing as yields recovered late on and we're seeing a much calmer mood in trading today. S&P 500 futures are up by 0.4% currently but sentiment remains that the session we're experiencing now is more of a breather rather than a U-turn in sentiment.
In that regard, one of the key areas to watch out for in markets will be the 200-day MA (blue line) in the S&P 500. If that gives way, sellers will regain control and it is a rather solid indicator of further bearish sentiment.
I would argue that one should also pay attention to the bond market for more clues but given the way risk is behaving right now, both assets here are rather synonymous.
As for how this impacts currencies, I reckon the slight indecision of whether or not we're chasing after a full-fledged risk-off move is keeping major currencies on edge this week - hence, the narrow ranges - but that could all change if we start seeing better direction in the bond market and equities when they move on either side.
