The Japanese yen rallied against most other major currencies as Asian equities are staying in the red following the lower closes in US. There were renewed concerns over the situation in Ukraine as US president Obama warned of further sanctions to Russia if it engages in "deeper incursions" into Ukraine. Nonetheless, the decline is US stocks are more a reflection of the lack of follow through momentum ahead of near term resistance levels. DOW ended -98.9 pts, or -0.6% lower at 16268.99, well clear of this year's high of 16588.25. Similar picture was found in S&P 500, which dropped -13.06 pts, or -0.7% to close at 1852.56. That compares to this year's high, and historical high of 1883.97 made last week. We've mentioned in our weekly report before that markets are possibly turning back into risk averse mode and we'd still favor more downside in equities than upside.
Another development to note was the extended decline in 30 year yield. The TYX dropped -0.028 to close at 3.551 which was the lowest close in March so far. It's likely heading back to this year's low of 3.539 after failing to take out 55 days EMA again. TNX, the 10 year yield, also weakened by -0.034 to close at 2.701 overnight as it failed to sustain above the 55 days EMA. Even though it's still far above corresponding support of 2.579, the technical picture of TNX looks quite bearish. Both the developments in stocks and yields favor more downside in yen crosses.
In the currency markets, strength in yen was seen most clearly against Euro, which was then pressured additionally by the pull back in EUR/GBP. We'd mentioned before that we'll pay attention to 101.20 in USD/JPY, 140.44 in EUR/JPY and 167.77 in GBP/JPY. EUR/JPY has now taken the lead and breached 104.44 already. That is, fall from 143.78 is resuming and we'd likely seen break of 140 handle soon for 138.78 support.
While markets are back in mild risk averse mode, the Aussie and Kiwi are not bothered. AUD/USD's extended recent rise to as high as 0.9244 so far and is showing sign of acceleration after optimistic comments from RBA governor Stevens earlier this week. Meanwhile, NZD/USD is lifted by better than expected trade data, which showed larger than expected trade surplus at NZD 818m in February.
Looking ahead, Eurozone M3 and UK retail sales will be released in European session. US will release Q4 GDP final, jobless claims and pending home sales.