Stock Slump Triggers JPY, CHF Rally

After hitting alltime highs earlier in the week, stocks reversed sharply Thursday, with the S&P 500 shedding as much as 3.5% on a tech-lead decline that saw recent outperformers (most notably Tesla and Apple) lead the move lower. Sell programs and volume spikes were common on the way lower, with some citing a rotation from tech sector to financials as partially responsible.

Catalysts for the stock sell-off were few and far between, with most datapoints Thursday coming within range of median expectations. Although markets may be erring on the side of caution ahead of Friday's jobs report given the recent stock rally.

This fed through into currency markets via JPY, CHF and USD strength and worked against NZD, AUD and NOK.

For EUR/JPY, the Thursday decline will have called the recent rally into question, with markets coming close to the 124.44 bear reversal trigger.

Focus Friday turns to the August Nonfarm Payrolls report. Data leading into the figure has been mixed, with lower-than-expected ADP employment change and employment components below 50 for both the ISM services and manufacturing indices. The US are expected to have added 1.35mln jobs, prompting a further drop in the unemployment rate to 9.8%.