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Yen Rises Broadly as Hong Kong Free Fall Triggers Risk Aversion in Asia

US stocks surged to new record overnight, shrugging off FOMC minutes. But Asian markets are walking another path, as led by the free fall in Hong Kong stocks. Yen surges broadly on risk aversion, followed by Swiss Franc. Commodity currencies are generally pressured, with Aussie weighed down by dovish RBA comments too. Euro, Sterling and Dollar are mixed for the moment, awaiting ECB minutes for more guidance.

Technically, USD/JPY’s break of 110.41 support suggest rejection by 111.71 key medium term resistance. It’s also a very early sign of larger bearish reversal. Immediate focus will be on 130.02 support in EUR/JPY to double confirm near term bearishness in Yen crosses. Similarly, AUD/JPY is now eyeing 82.11 support and break will resume the whole fall from 85.78.

In Asia, Nikkei closed down -0.68%. Hong Kong HSI is down -2.40%. China Shanghai SSE is down -0.78%. Singapore Strait Times is down -0.55%. Japan 10-year JGB yield is down-0.0060 at 0.031. Overnight, DOW rose 0.30%. S&P 500 rose 0.34%> NASDAQ rose 0.01%. 10-year yield dropped to as low as 1.296, before closing down -0.049 at 1.321.

S&P 500 hit new records, shrugs off FOMC minutes

US stocks regained bullishness overnight, with S&P 500 and NASDAQ closing at new record highs. FOMC minutes noted that tapering of asset purchases would happen “somewhat earlier” than expected, after seeing more data over the “coming months”. Meanwhile, rate hike could also come “somewhat earlier” than expected. The overall messages were largely consistent with the prior statement and projections.

Suggested readings on FOMC minutes:

S&P 500 rose 0.34% or 14.59 pts to close at 4358.13. The current medium term up trend is still on track to 100% projection of 2191.86 to 3588.11 from 3233.94 at 4625.94. In any case, near term outlook will stays bullish as long as 4257.16 support holds, in case of retreat.

Hong Kong stocks in free fall on fear of more regulatory crackdown

While US stocks were strong, Asian markets are trading notably lower today, as led by the free fall in Hong Kong. Selloff in Chinese tech stocks intensified after the Chinese government announced a step up in oversight on Chinese stocks listing in the US. The announcement came just after the surprised crackdown on ride-hailing giant Didi, days after it’s mega IPO last week.

At the time of writing, HSI is down -2.5%. Considering the downside momentum, the break of 38.2.% retracement of 21139.26 to 31183.35 at 27346.50 is starting to make outlook bearish. Focus is now on 26782.61 resistance turned support. Sustained break there will suggest that whole rise from 21139.26 has completed at 31183.35 in a corrective three-wave structure. That would at least open up a bearish case for 61.8% retracement at 24976.10 and below.