Japanese yen, safe haven flow, treasury revenue, mood – hotspots
- Markets in Asia-Pacific have been tightened as risk aversion captures markets
- Japanese yen attracts savings streams alongside treasuries when the mood deteriorates
- USD / JPY Testing of a 100-day simple moving average after much lower movement
Tuesday’s Asia-Pacific outlook
Next is the Asia-Pacific session Wall Street lower than the risk of risk aversion in global markets. US stock market losses were deep and large, driven by a 2.09% decline in the Dow Jones Industrial Average (DJIA). Risk aversion led to a move to the treasuries, bringing the benchmark to the lowest level of 10-year returns since February. Fears of a slowdown in economic growth due to the recurrence of Covid cases are pumping the brakes on growth-related assets. Asylum-free currencies benefited from risk-free flows, with the Japanese yen being the biggest benefactor.
Crude oil and Brent oil prices fell sharply, reflecting the same concerns that pushed stock markets lower, but also the OPEC + deal, which will result in an increase in supply in August. The oil cartel agreed to increase supply by 400,000 barrels per day from next month. Crude oil fell the worst in months as additional supply increased due to demand-related problems. The global narrative seems to be in serious jeopardy, in some ways complimenting the signals of temporary inflation that the major central banks have been talking about.
Speaking of central banks, the Reserve Bank of Australia (RBA) will publish the minutes of its July meeting today. The RBA reduced its asset purchases slightly while keeping its cash ratio unchanged at 0.10%. Australia’s economy has performed well, but a new round of closures in major metro areas could support growth. In Victoria, 13 new cases of local origin were seen on Monday, extending the closing date. Sydney New South Wales (NSW) also saw an increase in locking protocols over the weekend. Australian ten-year bond yields fell to their lowest level since early February, falling more than 6% overnight. This compares to a 0.55% drop overnight against Greenback, a currency that also attracts asylum flows.
Today, wires are also seeing inflation data from Japan. A small price increase is expected in June, with a consensus forecast of a 0.2% year-on-year increase, compared to 0.1% in May. However, the yen is likely to remain strong despite Tuesday’s data. This is because the currency may focus on its shelter-oriented features, while CPI data do not change the monetary policy trajectory of the Bank of Japan much. This means that the yen is compared to growth-oriented Australian dollar opens the door to relatively more aggressive volatility together AUD / JPY falling well over 1% on world markets on Monday.
USD / JPY Technical Outlook:
Japanese yen fell more than 0.5% against the euro US dollar overnight, temporarily bringing the currency pair below the 100-day Simple Average (SMA) before recovering part of the loss. The 61.8% Fibonacci retracement level, which moved from April to July, saw prices rise overnight from a deeper rebound. Both MACD and RSI oscillators monitor lower and the MACD intersects below this centerline, a fall signal.
USD / JPY daily card
The chart has been created TradingView
Japanese Yen RESOURCES TRADING
– Written by DailyFX.com analyst Thomas Westwater
Use the comments section or below to contact Thomas @FxWestwaterTwitter