A flood to the USD and away from the yen generated an
earthquake in the boarder market. USDJPY punched through 100.00 after better
than expected US jobless claims figures caused investors to curb beats on the
duration of QE3. From here, we are watching a resistance zone from early-2009
around 101.45 and then another barrier for the pair around 102.85. AUDUSD
smashed barriers around 1.0150 and 1.0115, causing investors to cut
expectations for further easing from the RBA.
A break of parity may elude the aussie for now, given the
strength of support around 1.0050 and 1.0000. However, we can see further AUD
weakens in the long-term. In fact, we have been AUD bearish for quite some
time, and if the walls around parity fall in the near-term then we may see price
action replicate the massive sell-off of April and May last year.
The sell-off in the yen had implications for Japanese
equities, with the Nikkei surging higher as pressure eased on Japanese
exporters. The combination of Abeconomics and a weaker yen, which is largely
due to Abe’s push for looser monetary policy in Japan, has propelled the Nikkei
around 60% higher since it first looked like Abe would make good on his plan
for extreme monetary policy easing.
Technically, the Nikkei 225 is testing a key resistance zone
from mid-2008. At the same time, the index is venturing into overbought
territory, although there is still some room for upside movement according to
the RSI. As a result, we may see some downwards action, possibly after a period
of further gains.
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