Yen suffered steep selling overnight on stronger as a reaction to stronger than expected US PPI. In the background, it’s believed that escalation of trade war will eventually lift inflation and forces Fed to continue with tightening beyond neutral rate. Also, Yen is getting little support from stock markets as the reactions to the US 301 tariffs on USD 200B in Chinese goods were brief. Yen is stays pressured today and is trading as the weakest one for today and the week.
Asian markets are paring much of yesterday’s losses. At the time of writing, Nikkei is up 1.3% , HK HSI is up 0.7%, Singapore Straight times is up 0.1. China SSE is up 1.9% at 2830.44, back above 2800 handle.
We’ve noted multiple times that the support zone between 2016 low at 2638.30 and 2700 psychological level is a very strong one. While the larger trend is still bearish, we’re not expecting this zone to be taken out easily. And if there is a breakthrough, there is risk of direct intervention by the government too.
Now, with SSE back above 2800, the case of near term rebound is saved. And focus is back on 2848.37 resistance. Break will extend the rebound towards 3000 handle. And that will help stabilize the Asian markets.