- MarketPulse - https://www.marketpulse.com -

APAC Session. North Korea Worries Weigh on Yen/Nikkei

USD/JPY trades heavier along with the Korean Won as North Korea tensions also weigh on Japan stocks.

North Korea tensions were the highlight of the Asia session, eclipsing last night’s blockbuster ADP Employment Change, and the FOMC minutes Federal Reserve balance sheet unwind bombshell. President Trump spoke with Prime Minister Abe about the situation ahead of his meeting with China’s President Xi, reiterating it seems nothing is off the table. Unsurprisingly, the USD/KRW has traded higher throughout the session, up 9 Won or 0.80% to 1133.

USD/JPY has also traded heavily, down 40 points to 110.30 at one stage before settling at 110.50 as the Nikkei dropped one percent on safe-haven flows. This is in exception to most of the G-10 where the USD has been flat to small up on the day. Clearly, regional worries are taking precedence over a massive ADP figure of 263,000 and the news that the FOMC are looking at a balance sheet run down to start later in the year. The latter in particular is significant, as to my mind it adds up to a potentially 3rd effective tightening to come making it four for the year.

The focus will now be on the important 110.00/110.10 support level on USD/JPY where we expect to see a lot of two-way interest with the possibility of stop-losses behind setting a new trading range. Ahead of this, there is support at 110.25, with resistance at yesterday’s high at 110.75 and then 111.50. As equities and metals rolled over last night on the FOMC news, it was surprising that USD yields in fact fell.

As equities and metals rolled over last night on the FOMC news, it was surprising that USD yields in fact fell. A catch-up correction higher is possibly the only thing that could prevent at least a test of the 110 area. Tonights Non-Farm Payrolls becomes even more important in this context with estimations marked higher materially following the ADP overnight.

USDJPY240Minute [1]

USDJPY 240 Minute


The Aussie Dollar has been the other main mover in the Asian session with a double whammy from the banking regulator and China data.  APRA, the Australian Banking Regulator, intends to make banks hold more capital against risky mortgage lending. Housing Capital: source AFR  This followed already announced limits to interest-only lending recently announced.

The March China CaixinPMI Services then came in at a six-month low of 52.2.

CHINA MAR CAIXIN PMI SERVICES: 52.2 (6-month low and 3rd straight sequential decline) V 52.6 PRIOR,

COMPOSITE PMI: 52.1 (6-month low) V 52.6 PRIOR – Source TradeTheNews.com [2]

AUDUSD 240 Minute [3]

AUDUSD 240 Minute

The AUD dropped 40 points to a low of 7530 before a slight recovery to 7542. Having broken down on the AUD/JPY cross the AUD/USD is now eyeing the important support zone of 7490/7500. A daily close below suggests a new and lower trading range is on the card. Up above AUD now has resistance at  7590 and then 7680.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley [7]

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

Latest posts by Jeffrey Halley (see all [7])