From Marc Chandler at Bannockburn Global Forex:
Overview: The sharp fall in global equities after the stunning reversal in the US yesterday is the main development today. The largest markets in the Asia Pacific region fell more than 2% today. Europe's Stoxx 600 is off more than 1%. It is selling off for the sixth session in the past seven. After posting larger losses early, US index futures have recovered in the European morning. The S&P futures are off fractionally and the Nasdaq futures are down around 0.25%. Bonds have caught a haven bid, including JGBs, where the very long-end is rally for the first time in more than two weeks. European bond yields of 2-5 bp lower. Moody's is set to announce the results of its review of Italy debt rating today, and an upgrade is possible. The 10-year US Treasury yield is near 4.06%, down a couple of basis points. This is a new low for the month.
The dollar is mostly firmer, but for a change, the yen is the strongest currency, with the explicit threat of material intervention spurring some, albeit limited short covering. The New Zealand dollar is the second strongest among the G10 currencies, up about 0.2%. The RBNZ is widely expected to cut rates next week. All but a few emerging market currencies are lower, led by the Indian rupee (~-0.80%) and South African rand (~-0.60%). Gold is not drawing a safe haven bid today and sulked to a three-day low a little below $4023. It is hovering around the 20-daying average in Europe near $4039. January WTI has been sold to nearly $57.40, its lowest level in about 4.5 weeks.
USD: The Dollar Index matched the month's high yesterday (~100.35), which was the highest since late May....
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