Volatility is still high but gradually falling
The ripples from Monday's events are subsiding but we're still seeing high volatility
Perhaps the most worrying sign that things are not over just yet was the collapse of US stocks late in the US session. That potentially wasn't a good sign at all. There's obviously still some nervousness around and maybe traders are deciding to square up at the end of sessions more than they would normally. That would be one reason for the turnaround, you see a big bounce, you don't want to lose out on what may happen in Asia, so you square up and see what the next day brings
On the other side of the coin, the trend in US stocks had been down recently anyway and that's more to do with rate expectations than anything else. The stock markets have been on an incredible run funded by easy CB money and not only has the punch bowl been taken away, the staff are calling last orders on the party altogether
European stocks are well down today but only a shade of what has been happening the last few days. Currencies are still walking about in a bit of a daze and still looking to find their right levels. From here I think the euro is most susceptible to larger moves and the upside will be watched keenly for signs of a top. The market still has increased worries over the Fed after the mini crash but as we saw yesterday, the data is holding up along the pattern it's shown for quite a while now. A few good data points and a decent NFP next week and all this will be forgotten and the dollar will be back in business. If so the euro stands to suffer most
As I said yesterday, the tech is starting to make a difference so the levels can be trusted a bit more now but be aware that we could still have some jumpy moves coming out of nothing, so adjust your trading accordingly
