David Scutt

I don’t blame traders for panicking in markets like these. There’s so much noise and so much hysteria, usually accompanied by countless charts resembling waterfalls. But one thing experience brings you is the ability to step back and look at the things that matter to gauge whether the panic is justified.

There are few FX pairs with a greater sensitivity to US interest rate expectations than USD/CHF, making it an excellent candidate for traders to look at ahead of the key US ISM services PMI report that will be released later in the session.

If the Nikkei 225 outlook is a function of moves in the Japanese yen due to the impact on exporter earnings, what should traders monitor to gauge when USD/JPY may bottom? Because right now, the risk-off tone in FX is flowing through to equities, feeding upon one other to create an ugly snowball effect in Japanese markets.

It looks like the United States may be entering recession. For EUR/USD traders, whether incoming data solidifies or weakens that view will likely determine how the pair performs this week. The tone will be set early with the most important piece of information arriving Monday.

AUD/USD is under pressure while ASX 200 SPI futures are flying following Australia’s Q2 consumer price inflation report, reflecting surprisingly modest underlying inflationary pressures that all but extinguish the risk of another RBA rate hike this cycle.

Chinese markets are performing poorly despite policymakers cutting key policy interest rates last week. It’s been that way since the conclusion of the Third Plenum earlier this month, an event that delivered little in the way of concrete measures to help appease concerns about the trajectory for the economy.