Yen’s rally accelerates in US session as helped by steep decline in stocks. Lackluster earnings is a factor weighing on sentiments. The lack of positive news from China-US trade talk is another. US Treasury Secretary Steven Mnuchin is in Beijing for two days of meeting. It’s common practice, a norm, as courtesy or whatever, for both sides to come out to say something nice after the first day of meeting. But so far, there is none. That could make traders a bit nervous.
DOW is trading down around -1% at the time of writing. And that is not unexpected. We’ve mentioned in a quick comment earlier today that price actions from 23360.29 are a triangle pattern. It may or may not extend. But an eventual downside break out is expected to 38.2% retracement of 15450.56 to 26616.71 at 23351.24. Whether there will be another up-leg before the breakout could depend on tomorrow’s non-farm payroll.
Back to the currency markets, we’d like to emphasized that EUR/USD is held below 1.2031 minor resistance, AUD/USD well below 0.7583, USD/CHF well above 0.9919. And even USD/CAD (CAD has been a rather resilient one) is in tight range below 1.2915. GBP/USD even extended recent decline to as low as 1.3537. The sharp fall in USD/JPY is not the end of the trend for Dollar. Instead, it just reflects that market are a bit nervous for now. And Yen also rides on the pull back in treasury yields. So Dollar bulls don’t need to panic before NFP.