The Japanese yen spikes .32 percent higher as Asian equities slump leaving the market uneasy. The Nikkei fell over 100 points with traders seeing the yen as a safe haven, leaving the US dollar modestly lower.
Chinese equities reached a two-week low due to reports that banks are ceasing loans to property-related companies, likely due to the ongoing property market that is getting quite frothy. Hong Kong shares have been pulled down, as well. “We are not out of the woods yet in terms of getting clarity on which direction this market is going,” said Stefan Worrall, director of equity cash sales at Credit Suisse.
There is still ripple effects pulsating through emerging markets, and there is uncertainty of future risks as the Federal Reserve continues to taper their asset purchases. CitiFX strategist Steven Englander said “there was no realistic expectation that EM would get any relief but they may be more vulnerable to bad news in the aftermath.”
The dollar-yen is shaky in early trade and easing closer to 102 yen per dollar. This level will be a key psychological support level before reaching 101.65. Yen futures spiked higher, and the safe haven currency is looking bullish.
The RSI has seen a nice smooth ascent with a bullish crossover in the +/- DMI on the 4H chart. Price action seen demand in a zone of .9725 and .9740 before closing above the 200 EMA. The moving average acted as support before the spike. There is minor resistance at .9790, but there is upside potential to surpass .9800. A pullback to .977 to .976 is probable.