Wednesday opens with all eyes firmly on the indices after a brutal sell-off yesterday. The drop was sharp enough to sour sentiment for the entire week, and the big question now is whether indices can stage any kind of recovery or if the bearish tone will continue to dominate. Futures are showing signs of hesitation, and the mood across equity markets remains grim.
On the currency front, the spotlight is on the New Zealand dollar, which is the weakest currency today. The RBNZ delivered a widely expected 25 bp rate cut, but the dovish tone of the statement and press conference hit the kiwi hard. In contrast, the British pound is climbing, fueled by stronger-than-expected inflation data from the UK at 3.8%. The Japanese yen is also gaining as risk-off sentiment continues to flow. Later in the day, attention will turn to the release of the FOMC meeting minutes. While less influential than an actual statement, traders will still look for any clues on future rate moves and policy direction for the dollar and indices.
Commodities are attempting to stabilize after a tough start to the week. Oil is showing a small uptick, trying to build some ground after recent weakness. Gold is also ticking slightly higher, but in general, metals remain under pressure this week. With equities still digesting Tuesday’s sell-off, today could prove pivotal in setting the tone for the rest of the week.