In recent weeks, equity markets have held up better than one would have expected, absorbing shocks like the R2D2 flu (better, Lilac?) and continuing to rally. Today seems to be the reverse; we’ve gotten two good data points but we’re slipping rather than rallying. This suggests a bout of profit-taking is due. Given that the dip is coming from key levels technically, the pullback could have more ominous implications. The S&P is down 0.7% after the data.
This would suggest GBP/JPY, AUD/JPY and some of the other “risky pairs” could be in for some profit-taking as well. EUR/USD should remain heavy if stocks slide, but AUD, CAD and the others have more to lose…
