 Risk aversion is back as the main theme in the global financial markets. The crash in the US overnight has spreaded to Asia. At the time of writing, Japanese Nikkei is down -756 pts or -3.42%, being the worst performer in Asia. 10 year JGB yield also suffers another day of steep decline, down -0.020 at 0.114. It was above 0.15 just a few days ago. Hong Kong HSI is down -2.07%, China Shanghai SSE is down -1.65%, Singapore Strait Times is down -1.31%. Yesterday, DOW dropped -608.01 pts or -2.41% to 24583.42. S&P 500 lost -3.09% while NASDAQ was even worst, down by -4.43%. Treasury yield also closed sharply lower with 10 year yield down -0.042 at 3.117. However, 30-year yield was down just -0.018 at 3.346. In the currency markets, Yen is trading as the strongest one on risk aversion, in particular considering the steep fall in Nikkei. Canadian Dollar is the second strongest as it's still feeling the support by hawkish BoC rate hike yesterday. Meanwhile, Dollar, Australian and New Zealand are the weakest ones, together with Sterling. Dollar gets no support from known Fed hawk Mester's comments. Euro is mixed for now after this week's decline. But the common currency is vulnerable to further selloff on German Ifo and any dovish turn in ECB rhetorics. Technically, one development to note is USD/JPY has finally broke 111.94 minor support. Recent fall from 114.54 is likely resuming through 111.62 support level. EUR/USD, GBP/USD, EUR/JPY and GBP/JPY are staying bearish for further decline. |
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