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Yen Surges as Asia Opens on Risk Aversion

Yen rises broadly as the markets start the week with risk aversion in Asia. On the other hand, Canadian Dollar is trading as the weakest, leading other commodity currencies lower. European majors are mixed together with Dollar for the moment. The economic calendar is rather light today and focuses will stay on development in the risk markets. Though, attention will be turning to ECB meeting later in the week, in particular its new forward guidance.

Technically, AUD/JPY and CAD/JPY has already broke out to the downside. Eyes will be on 129.60 support in EUR/JPY and 150.64 support in GBP/JPY. Break of these levels will align the developments with other Yen crosses and solidify Yen’s near term strength. At the same time, USD/CAD is edging close to 1.2653 structural resistance. Break there will also solidify the case of medium term bullish reversal, which could then see USD/CAD heading back to 1.3 handle.

In Asia, at the time of writing, Nikkei is down -1.40%. Hong Kong HSI is down -1.57%. China Shanghai SSE is down -0.12%. Singapore Strait Times is down -0.95%. Japan 10-year JGB yield is down -0.004 at 0.017.

Hong Kong HSI gaps down after US warned of business risks

Asian markets are trading broadly lower as led by Hong Kong HSI, which is down nearly -1.6% at the time of writing. In a late move last week, the US administration published a nine-page Hong Kong Business Advisory, jointly by the departments of State, Treasury, Commerce and Homeland Security. The document warned US firms of encountering a number of risks posed by China’s national security law in the city.

Today’s gap down in HSI suggests that corrective rebound from 26861.87 could have completed at 28218.52 already. The failure to even touch 55 day EMA is a near term bearish sign. The index could at least have another test on 26782.61 key medium term resistance turned support. Such development to cap gains in other Asian markets, and give Yen additional support.

AUD/JPY and CAD/JPY downside breakouts on risk aversion

AUD/JPY and CAD/JPY break out to the downside on risk aversion in Asian markets. AUD/JPY’s fall from 85.78 resumed and hits as low as as 80.98 so far. Rejection by 4 hour 55 EMA is a near term bearish sign and outlook will stay bearish as long as 82.80 resistance.

Immediate focus is now on 38.2% retracement of 73.12 to 85.78 at 80.94, which is close to medium term channel support. Sustained break there will argue that the fall from 85.78 is indeed corrective whole up trend from 59.85. Deeper fall could then be seen back to 73.12/78.44 support next next.

CAD/JPY also breaks through 87.08 support to resume the whole decline from 91.16. Outlook will stay bearish as long as 88.69 resistance holds. Current fall would target 38.2% retracement of 77.91 to 91.16 at 86.09. Reaction from there would unveil whether it’s correcting the rise from 77.91, or the whole up trend from 73.80.