Asia Closing: Potential shift in risk trends?

USD/JPY H1

Yen, which has been highly correlated to risk trends, has pushed above Friday’s high. Is this signalling a full bullish reversal of sentiment or are we simply seeing the efforts of BOJ’s intervention reaping fruit? Looking at other risk correlated assets such as Oil and S&P500, it seems that trends are not in full agreement with one another. This implies that the likelihood of a full bullish reversal across broad markets right now may be low, but certainly the foundations are set for a full bullish reversal should there be a catalyst (e.g. Spain Bailout) that could bring out the bulls in all traders.

AUSD/USD H1 

Aussie remain depressed, trading around 1.03 after RBA announced yet another 0.25% rate cut. Prices could still rally if broad risk sentiment is bullish. Yesterday’s low and today’s L3 at 1.034 will provide significant resistance. Failure to rally above the level may result in AUD/USD consolidating between L4 and L5 despite any prevalent risk rally.

NZD/USD H1

Kiwi rallied from the lows carved out during yesterday’s US session but we were not able to reach Yesterday’s high. Without any news on the horizon, coupled with lower volatility in NZD/USD, we could potentially see Kiwi continuing it’s consolidation phase between 0.826 to 0.832.

Nikkei 225 Futures H1

Still looking lower as a downward trendline act as potential resistance for any upside movement. Keep a lookout for 8,850 which is Friday’s low, a break above will bring relief to the bulls but the price level that remains important for today/this week is 8,915.

Bottomline:

Mixed signals from different assets which could mean indecision in the market. Nikkei is forming a downward triangle while USD/JPY is forming an upward Triangle. As we enter into Europe Session, traders are already talking about a Spanish Bailout, which is bring fresh optimism into the early session. Perhaps we could see prices reacting the same as yesterday, where Asian session was effectively the low of the trading day, with selling resuming once again tomorrow. 

Once again, keep a lookout for any announcement from Europe region which could potentially be a game changer across markets.

 

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