US stocks massacred, dollar & yields drift lower

Yesterday saw a massive reversal in US stocks as the Nasdaq 100 index plunged from +2% to -2% shortly after Europe closed for trading, bringing the tech index below the 200-day moving average for the first time since April 2020.

At the same time, the Dow index also dropped below the 200-day average, while the SP500 index stopped its decline at that level. As a result, the overall sentiment now seems bearish as rallies tend to be sold, indicating a downward trend. 

European bourses saw some selling too, but not that harmful as the ECB reiterated its dovish stance yet again. Furthermore, ECB President Christine Lagarde is due to participate in a virtual panel discussion titled "Global Economic Outlook" at the World Economic Forum, likely repeating the exact old phrase - inflation is transitory, and we don't need to raise rates (despite the 22% yearly print in German PPI yesterday). 

There are no other significant macro data on schedule today, apart from Canadian retail sales, likely influencing the USDCAD pair only. 

In the FX, the greenback slid today, following US yields lower. Although US real yields have been rising recently, the USD has failed to capitalize on that, prompting a nice rally in precious metals. 

Fed funds futures have already fully priced in an interest rate hike in March 2022 and a total of four hikes within the year. The Fed decides about monetary policy next week. Although no change is expected, the central bank might sound somewhat hawkish, considering the massive inflation everywhere.