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Yen Surges as Hong Kong Stocks Accelerate Free Fall

Yen jumps broadly in Asian session today as Hong Kong stocks are accelerating its free fall. Dollar is following as the second strongest for now, and then Swiss Franc. Commodity currencies are naturally the weakest, as led by Australian Dollar, but Sterling is not too far away. Four central banks will meet this week. In particular, traders could be turning more cautious towards FOMC policy decision and economic projections. While an announcement of tapering is very unlikely, there is scope of some hawkish surprises.

Technically, Sterling appears to be underperforming Euro today, but that’s mainly because Euro was the worse one last week. A development is note is whether the tide between Sterling and Euro is turning as risk sentiment turns sour. For now, deeper fall is in favor in EUR/GBP as long as 0.8561 minor resistance holds. But break of this resistance will bring stronger rise to 0.8612, and possibly resume the rebound from 0.8448 low.

In Asia, Japan and China are on holiday. Hong Kong HSI is down -4.13%. Singapore Strait Times is down -0.33%.

Hong Kong HSI takes another beating as selloff in property stocks spreads

Asian markets are trading in risk-off mode, as Hong Kong stocks are taking another beating while Japan and China are on holiday. Selloff in shares of the troubled Chinese giant Evergrande Group is spreading to other property stocks. The group has just announced over the weekend to start repaying its wealth management products with real estates.

At the time of writing, Hong Kong HSI is down more than -4% or -1000 pts. As for the near term, 61.8% projection of 29394.68 to 24748.84 from 26560.03 at 23688.90 would be an important level to defend this week. Some support could be seen there to bring at least some consolidations first. However, any further downside acceleration could easy push HSI through the level to 100% projection at 21914.19. That’s a possible scenario considering the FOMC event risk this week.

AUD/JPY extends decline on risk aversion, could target a test on 77.88 support first

AUD/JPY’s fall from 82.01 resumes today on general risk-off sentiments in Asian markets. For now, further decline is expected as long as 80.49 minor resistance holds. Sustained trading below 61.8% retracement of 77.88 to 82.01 at 79.45 will raise the chance that it’s indeed ready to resume whole decline from 85.78 high. Retest of 77.88 low should be seen first.

As the fall from 85.78 is now seen as a correction to up trend from 59.85, break of 77.88 would pave the way to 38.2% retracement of 59.85 to 85.78 at 75.87 next. Such development, if happens, could be a prelude in similar selloff in other Yen crosses.