The scale of the sell-off in stocks is the biggest in 8 months, sell USD/JPY?
Sell-off in stocks spurred a bid for safe-haven assets such as gold and yen. In addition, if the 10-year Treasury yield falls below 3%, this could drag USD/JPY lower.
- Dow Jones index fell 831 points overnight, and Shanghai stocks slid 146 points earlier, marking a 5.37% drop.
- Amid the risk-off trading environment, yen is trading near a three-week high against the dollar as US stocks rout extends into regional Asian stocks.
- There is no sign of a haven bid for the US dollar despite the broad weakness being seen across Asian equities and commodities.
- After the dollar index hit the 96 price level, we believe there could be some profit-taking positions leading to USD/JPY shorts.
Fullerton Markets Research Team
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