Yen extends broad based rally together with Swiss Franc as the financial markets are in full risk averse mode. DJIA dived to as low as 15803.55 overnight before paring some loss to close at 16027.05, down -117.92 pts or -1.1%. Nikkei followed and is trading down -836.09 pts or -4.92% at the time of writing. Australia ASX 200 is also down -125.9 pts or -2.5%. Some Asian markets including China, Hong Kong, South Korean, Singapore and Taiwan are still in Lunar New Year holiday. The risk averse sentiments can also be seen in bond markets with US 10 year yield closing at 1.735%, hitting the lowest level in a year. Japan 10 year yield also dropped below zero for the first time. Meanwhile, gold extended recent rally and breached 1200 handle briefly.
Technically, in spite of the late recovery in both DJIA and S&P 500, both indices are vulnerable to deeper fall. And depending on whether the current selloff would intensify in near term, they could be testing recent low of 15450.56 and 1812.9 in a week or two. WTI crude oil is so far holding on to 30 handle and losing it could be the trigger for more selling in stocks. USD/JPY's strong break of 116 support zone would now pave the way for deeper fall to 110 as part of a medium term correction. GBP/JPY is also having an eye on 163.96 near term support and break will extend the medium term correction from 195.86. EUR/JPY has been relatively resilient but would still have a take on 126.09/16 support zone again.
On the data front, Japan M2 rose 3.2% yoy in January. Australia NAB business confidence was unchanged at 2 in January. UK BRC retail sales monitor rose 2.6% yoy in January. The economic calendar is light today. Swiss unemployment, German trade balance, UK trade balance and US wholesale inventories will be featured. But main focus will remain on the development in risk sentiments.