Risk aversion comes back again today, as led by the -807pts, or -2.89%, free fall in Hong Kong HSI. At the time of writing, FTSE and DAX are down -1.4% while CAC is down -1.9%. DOW future is down around -400pts. In the bond markets, Germany 10-year yield is down -0.04 at -0.33. US 10-year yield dis down -0.05 at -1.265.
In the currency markets, Yen and Swiss Franc are currently the strongest ones. AUD/JPY breaks through 82.11 support to as low as 81.50 so far, resuming whole decline from 85.78. Rejection by 55 day EMA is a clear sign of near term bearishness. Such decline is seen as correcting the rise from 73.12 for the moment. Hence, we’d look for strong support from 38.2% retracement of 73.12 to 85.78 at 80.94 to contain downside and bring rebound. However, sustained break of 80.94 will argue that it’s indeed correcting whole up trend from 59.85 and target 73.12/78.44 support zone.
GBP/CHF’s sharp fall today now argues that consolidation from 1.2579 might have completed with three waves up to 1.2853. Immediate focus is now on 1.2579/2610 support zone. Decisive break there will confirm this bearish case and target 100% projection of 1.3070 to 1.2579 from 1.2853 at 1.2362. At this point, we’d expect strong support around 1.2259 resistance turned support to contain downside and bring rebound.
