Dollar is trying to extend near term rebound with help from surging treasury yields and risk-off sentiments in stocks. But Canadian Dollar is still outshining slightly, as support by oil price rally. Aussie and Kiwi are soft, but selloffs are mainly centered around European majors. Euro is particularly weak as it looks set to resume recent down trend against Sterling and Swiss Franc too.
Technically, Yen is also trying to firm up too, even though it’s lagging behind the greenback and Loonie. A focus will be on 129.59 support in EUR/JPY. Sustained break there will dampen our original bullish view of near term reversal. That would indicate that rebound form 127.26 has completed at 131.59 already, and bring deeper fall back to this low. That could be a prelude to more Yen strength elsewhere.
In Asia, at the time of writing, Nikkei is down -2.26%. Hong Kong HSI is up 0.02%. China Shanghai SSE is down -0.29%. Singapore Strait Times is down -0.01%. 10-year JGB yield is down -0.0026 at 0.149. Overnight, DOW dropped -1.51%. S&P 500 dropped -1.84%. NASDAQ dropped -2.60%. 10-year yield rose 0.093 to 1.865.
Major US stock indexes, particularly the NASDAQ tumbled sharply overnight, while benchmark treasury yields surged. Investors are still in the process of adjusting to the evolution of a more aggressive Fed in terms of stimulus withdrawal. At the same time, it’s unsure when the no-longer-transitory inflation would start easing down, and Fed’s response to that.
NASDAQ dropped -2.6% to close at 14506.89. The development is not a surprise as price actions from 16212.22 are seen as correcting the up trend from 10822.57 to 16212.22. Deeper fall could be seen. But we’d expect strong support around 14100/14200 to contain downside to bring rebound. The support zone coincides with 14715.11 resistance turned support, 14181.69 structural support, and 38.2% retracement of 10822.57 to 16212.22 at 14153.37. However, sustained break of this level will argue that NASDAQ is already in a larger scale correction.
10-year yield rose 0.093 to close at 1.865. The medium term up trend is back in full force. 2% handle now looks rather approachable. But TNX should start to feel heavy above there. There should be strong resistance from 2.16/18 zone to repel the rally. This is a cluster level of 61.8% projection of 0.398 to 1.765 from 1.343 at 2.187 and 61.8% retracement of 3.248 to 0.398 at 2.159. But then, a strong break there would indicate some substantial underlying development is underway.
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