Asian equities retreated to a 19-month low after Wall Street suffered its worst loss in eight months, which led to broader risk aversion, which led to an increase in market volatility gauges and concerns over expensive stocks markets in an environment of rapidly rising dollar yields.
Risk aversion is seen to be the name of the game during the Asian sessions as market participants are caught by the prior session’s bearish moves. US equities took a lot of damage as the result of tightening expectations for the Fed and the continued increase of US bond yields, which sapped the demand for riskier assets such as equities.
The IMF didn’t help when its managing director Christine Lagarde supported a pessimistic report published earlier this week by warning against an escalation in global trade tensions.
As for Asian equities, Nikkei is down by 4.16% to 22,529.0,ASX 200 is down by 0.52% to 5,889.5,Shanghai index is down by 4.34% to 2,607.444 and Hang Seng is down by 3.76% to 25,207.0
Similarly, commodity failed to catch a break with gold’s retreat as positive US reports supported additional Fed rate hikes. Meanwhile, crude oil prices extended their declines after the American Petroleum Institute showed higher-than-expected U.S. crude stockpiles last week. Gold is down by 0.10% to $1,193.07 per troy ounce, U.S. WTI is down by 1.06% to $71.84 per barrel and Brent crude oil is down by 1.48% to $81.40 per barrel
In absence of macroeconomic releases in the Euro-zone today, traders will focus on the US initial jobless claims as well as the consumer price index and average hourly earnings, both for September, set to release later in the day.
EURUSD: EUR/USD’s break of 1.1550 minor resistance indicates short-term bottoming at 1.1430.
GBPUSD: GBP/USD’s rise from 1.2920 is still in progress.
USDCAD: USD/CAD’s rebound from 1.2780 extends to as high as 1.3070 so far.
USDCHF: USD/CHF drops to as low as 0.9855 so far as a correction from 0.9955 extends.
USDJPY: USD/JPY’s fall from 114.55 extends to as low as 111.95 so far today.