Asia-Pacific Markets Face Risk-Off Move as US Dollar Batters Sentiment


US Dollar, DXY, BOJ Kuroda, Japanese Yen, Chinese Yuan, Technical Outlook – Talking Points

  • Asia-Pacific markets are under pressure after the US Dollar surged on Friday
  • Bank of Japan Governor Kuroda to speak today as USD/JPY remains near 145
  • DXY Index aims for the May 2002 high after piercing trendline resistance

Monday’s Asia-Pacific Outlook

Asia-Pacific market sentiment may suffer from Friday’s steep selloff on Wall Street. The Dow Jones Industrial Average (DJIA) fell 1.62% on Friday to close the week out with a 4% drop. Traders sold risk assets after British Gilt yields surged higher following news of a British package of tax cuts and other free-market measures. The British Pound fell to its lowest level since 1985 against the Greenback. Gold held up well throughout the week until Friday, when prices sank over 1%. XAU’s direction may hinge on the S&P 500 and broader equity direction in the days ahead.

The US Dollar and its dominance over the last few months is weighing heavily on Asia markets. The Japanese Yen and Chinese Yuan have already displayed potential failure points in the system, threatening to reproduce another Asian financial crisis. Bank of Japan Governor Haruhiko Kuroda is due to speak today as the Japanese Yen remains a prime focus for market participants. A move above 144 for USD/JPY is likely to attract immediate attention, with the 145 level being the current pain threshold for the Ministry of Finance (MoF).

Today’s economic calendar is rather light, leaving prevailing risk trends at the helm for today. APAC equity indexes closed mostly lower on Friday; Hong Kong’s Hang Seng Index (HSI), China’s CSI-300 Index, and Japan’s Nikkei 225 Index fell by 1.18%, 0.34%, and 0.58%, respectively. Thailand and Hong Kong are slated to release trade data today, both for the August period.

China’s Yuan is likely to remain subject to a rising Dollar this week. The People’s Bank of China (PBOC) has attempted to slow USD/CNH’s ascent through its daily reference rate fixing operations, which are likely to continue but with limited effect. Elsewhere, the 18 level is in focus for the South African Rand as the country grapples with another round of power cuts. The country’s energy supplier, the state-owned Eskom, said that national grid outages should be expected until Thursday. USD/ZAR rose for a fourth week, bringing prices within 0.5% from the psychologically-important 18 level.

US Dollar Technical Analysis

The DXY Index smashed through its June 2002 high during last week’s big move. A trendline from May, which initially served as support before turning into resistance was pierced. Prices may find support at that trendline. The May 2002 high at 115.34 is a possible target, and bullish movement in DXY’s momentum oscillators supports a move higher. The Relative Strength Index entered overbought conditions, and MACD is tracking higher above its signal line.

US Dollar (DXY Index) – Daily Chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for

To contact Thomas, use the comments section below or @FxWestwater on Twitter


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