 Risk appetite was rather strong in Asian session today. Nikkei closed up 0.88% at 22799.64. At the time of writing, Hong Kong HSI is up 2.05%, China Shanghai SSE is up 1.70% and Singapore Strait Times is up 0.63%. The rally in stocks is partly due to record close in NASDAQ and S&P 500 on Friday. Also, the markets responded positively to the PBoC's measures to pause Yuan's decline. In short, China's central bank reintroduced measures that acts counter-cyclical to market forces to keep Yuan from falling too quickly. Yuan hit the highest level in more than two weeks earlier today but there is no follow through buying. The currency markets are mixed though. Yen is trading as the strongest one despite strong rally in equities. Canadian Dollar follows as the second strongest. Meanwhile, Dollar regains some ground and is trading as the third strongest. Euro, on the other hand, is paring back some of the last week's gains. Australian and New Zealand Dollar follow as the second weakest. Though, it should be noted that except USD/JPY and CAD/CHF, all major pairs are bounded in Friday's range, indicating lack of clear direction. Technically, dollar index should be in medium term correction now. More upside is in favor in EUR/USD as long as 1.1529 minor support holds. Similarly, more decline is expected in USD/CHF as long as 0.9889 minor resistance holds. But the greenback is staying in established range against Sterling, Australian and Canadian Dollar. It's yet to be seen which side the Dollar is taking. Meanwhile, today's retreat in USD/JPY is putting focus back to 110.74 support and break will invalidate near term bullishness. |
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