Japanese Yen, S&P 500, US Dollar, Australian Dollar, RBA – Asia-Pacific Market Opening
- Japanese Yen fell, markets may have bet on the continuation of Abenomics
- US dollar declined despite broad weakness in global equity markets
- Australian dollar eyeing RBA, JPY could be exposed to further losses
The risk-averse Japanese yen has been the worst performing major currency over the past 24 hours. This despite the weakness of most stock market sectors during the Wall Street trading session. The Dow Jones Industrial Average and S&P 500 closed -0.78% and -0.22% on Monday while technology Nasdaq 100 managed to register an increase of 0.68%.
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The weakness of the yen may be a consequence of late last week, when Japanese Prime Minister Shinzo Abe stepped down on health grounds. Markets may be betting on Abe’s successor to continue his “Abenomics” recovery plan. the Nikkei 225 outperformed its APAC peers on Monday.
Despite losses in the majority of stocks on Monday, the safe haven-linked US dollar was also aiming a little lower. The greenback fell alongside yields on longer-term Treasuries. Fed Vice Chairman Richard Clarida noted earlier that “there is potentially a place for yield curve control.” Falling government bond yields may have contributed to the poor performance USD.
Tuesday Asia-Pacific negotiation session
With that in mind, the focus on the anti-risk yen may start to return to the dynamics of market sentiment. A disappointing session for APAC stocks ahead could help ease recent selling pressures on the JPY and USD. Conversely, the growth-linked Australian and New Zealand dollars could depreciate.
AUD / USD The Reserve Bank of Australia (RBA) rate decision will also review. Economists expect the spot rate and the 3-year yield target to remain unchanged at 0.25%. What could increase the risk of volatility in the Australian dollar are the concerns of policymakers about the economic impact of the lockdowns in the state of Victoria.
How can the RBA move the AUD / USD forward?
Live data coverage: RBA pricing decision
Technical analysis of the Japanese yen
The Japanese yen could risk extending its losses. On the daily chart below my majors based Yen index just broke below a decline Descending Triangle Chart Template – as expected. A confirmatory lower close could trigger further selling pressure as the yen seeks to test its cheapest average price since December 2019.
Yen index based on majors – Daily chart
— Written by Daniel Doubrovsky, Currency Analyst for DailyFX.com
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