FxPro: Growing demand for safe currencies brings stock markets weakening to a new stage

On stock markets, the sale of risky assets continues. S&P500 added 1.9% on Thursday, but the index futures eke out, returning to the area of lows from May. Japanese Nikkei225 loses 2% this morning, bringing the losses from the beginning of the month to 13.5%. Heng Seng fell under the 25000 mark, from which the index bounced earlier in October. The reversal to the decline began four weeks ago and is only gaining momentum as a snowball.

The fact that the foreign exchange market has joined the flight into reliable assets is alarming. This is a sign that the current sale has gone beyond the profits’ fixation on the stock markets and undermines confidence in future prospects.

Dollar index DXY rose to 96.40 in the reach of the peak values of August of 96.80. The EURUSD pair was trading at 1.1360, remaining under the pressure due to tension around Italy. Press conference of ECB President Draghi failed to weaken.

Although the head of the ECB is confident that the Italian Government and the European Commission would find a compromise and the current risks are not the reason to change the collapsing QE plans. Yet the euro was under pressure in global markets. Mario Draghi called the fragile monetary union, which returned the single currency to the trend of the decline that prevailed last month.

The Australian dollar has updated its 2016’s lows as a trend that has been observed from January. This Aussie’s weakening is an additional evidence of fears around the prospects of the world economy, as Australia is a major exporter of raw materials and its currency is seriously affected by global trends in demand for metals and coal.