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21 Aug 2015
USD/JPY hammered through 123.00, risk-off full steam
FXStreet (Bali) - USD/JPY continues to be hammered lower as the risk aversion market profile escalates following a 6 1/2 year low on China's Caixin Manufacturing PMI, with the exchange rate recently filling bids at 123.00, which failed to sustain prices, resuming the downtrend lower.
All stars align for Yen demand to persist
Unless there is a major turnaround on sentiment, the Japanese Yen should remain well bid across the board on Friday, a particularly prominent day for risk-off conditions if history serves as indication. Greek PM resignation, North-South tensions escalating, but most importantly, the Fed potentially delaying an increase in rates to Dec or even next year, continues to weigh. Moreover, the latest news from China has simply been the icing on the 'risk aversion' cake.
As Michael Every, Head of Financial Markets Research, Asia-Pacific, at Rabobank, notes: "who, if anyone, is going to emerge as the global stabilizer/consumer of last resort to stop us from more of this race-to-the-bottom turmoil?" To which he provides the following answer: No US, European or Chinese stabilizer, unlike in 1997-98, which was even more painful for Asian EM, but presaged a boom in developed markets."
USD/JPY technicals bearish and worsening by the minute...
The break through 123.00 round number now opens the door for an acceleration towards 122.50 support, which may be seen as the potential right shoulder of a H&S pattern on the daily. If that level fails to hold prices, further declines with a target of 122.00 psychological level may be due. On the upside, 123.00 becomes the key resistance now, ahead of 123.35/40, origin of the sell-off in Asia.
All stars align for Yen demand to persist
Unless there is a major turnaround on sentiment, the Japanese Yen should remain well bid across the board on Friday, a particularly prominent day for risk-off conditions if history serves as indication. Greek PM resignation, North-South tensions escalating, but most importantly, the Fed potentially delaying an increase in rates to Dec or even next year, continues to weigh. Moreover, the latest news from China has simply been the icing on the 'risk aversion' cake.
As Michael Every, Head of Financial Markets Research, Asia-Pacific, at Rabobank, notes: "who, if anyone, is going to emerge as the global stabilizer/consumer of last resort to stop us from more of this race-to-the-bottom turmoil?" To which he provides the following answer: No US, European or Chinese stabilizer, unlike in 1997-98, which was even more painful for Asian EM, but presaged a boom in developed markets."
USD/JPY technicals bearish and worsening by the minute...
The break through 123.00 round number now opens the door for an acceleration towards 122.50 support, which may be seen as the potential right shoulder of a H&S pattern on the daily. If that level fails to hold prices, further declines with a target of 122.00 psychological level may be due. On the upside, 123.00 becomes the key resistance now, ahead of 123.35/40, origin of the sell-off in Asia.