Market jitters inspire the JPY

The Shanghai Composite Index posted a second day of gains as the major market concluded +0.92% higher today. Other Asian equities such as the Hang Seng and ASX200 have also shown positive gains, whilst the Nikkei255 closed -1.96% lower. Market participants may now shift their focus on both the China flash PMI and ECB Presidential speech given by Draghi on Wednesday.

Some uncertainty has been brewing within the financial markets as the looming speech by Draghi may spotlight some concerns most investors have about the EUR, including inflation and QE. These concerns have translated to the EUR, which has experienced a selloff across the board in today’s trading session as investors become risk averse. Inflation in the Eurozone was revised lower at 0.1% in August; this disappointing figure may act as a catalyst which will cause Draghi to likely hint at an increase in size and duration of the ECB QE program. The risk adverse environment caused by the upcoming release inspired an appetite for safe haven-assets such as the JPY which has appreciated against most pairs including the GBP in Tuesday’s trading session.

A risk-off trading environment and extended financial volatility continue to punish the sterling. The GBP has experienced a decline against the USD and JPY this trading week, and since there are no key economic releases from the United Kingdom, this theme may be in the spotlight until next week. Regardless of this weakness experienced within the GBP, the outlook for the UK economy remains robust and even though investor sentiment is clearly shaky as of now, this may subside with time.

Taking a look into the commodity arena the AUD continues to exhibit vulnerable tendencies. The strong rebound in the price of iron ore last week, which inspired the bullish momentum within the AUD has been erased against its counterparts. The initial surge seemed short lived and with the gains surrendered, the AUD reverts to being technically bearish on the daily timeframe against the USD. Fundamentally this commodity currency still remains bearish as the lack of momentum in China continues to put pressure on its value simply because of its reliance on China trade.

AUDJPY
The risk-off environment has induced an appetite for the JPY. The AUDJPY is fundamentally bearish on the daily timeframe. Prices are trading below the 20 SMA and the MACD has crossed to the downside. A daily close below the 85.00 support may open a path to the next relevant support at 82.00. A move back above 87.30 invalidates this daily bearish outlook.

CHFJPY
The CHFJPY remains technically bearish on the daily timeframe as long as prices can keep below the 125.00 resistance. Prices are trading below the 20 daily SMA and the MACD has crossed to the downside. The next relevant support prices may decline to is the 122.00 level.

EURNZD
This pair remains in a period of consolidation. The MACD trades to the upside, but prices are just marginally below the 20 daily SMA. Resistance can be seen at 1.8000 and support can be found at 1.7250. A breach below 1.7550 may open a path to the 1.7250 support.