CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Daily brief: Asia-Pacific markets face risk-off move as US dollar batters sentiment

Asia-Pacific markets are under pressure after the US dollar surged on Friday; Bank of Japan Governor Kuroda to speak today as USD/JPY remains near 145 and DXY Index aims for the May 2002 high after piercing trendline resistance.

Monday’s Asia-Pacific outlook

Asia-Pacific market sentiment may suffer from Friday’s steep selloff on Wall Street. The Dow Jones Industrial Average (DJIA) fell 1.62% on Friday to close the week out with a 4% drop. Traders sold risk assets after UK Gilt yields surged higher following news of a government package of tax cuts and other expansionary measures.

The British pound fell to its lowest level since 1985 against the Greenback. Gold held up well throughout the week until Friday, when prices sank over 1%. XAU’s direction may hinge on the S&P 500 and broader equity direction in the days ahead.

The US dollar and its dominance over the last few months is weighing heavily on Asian markets. The Japanese yen and Chinese yuan have already displayed potential failure points in the system, threatening to produce another regional financial crisis. Bank of Japan Governor Haruhiko Kuroda is due to speak today as the JPY level remains a prime focus for market participants.

A move above 144 for USD/JPY is likely to attract immediate attention, with the 145 level being the current pain threshold for the Ministry of Finance (MoF).

Today’s economic calendar is rather light, leaving prevailing risk trends at the helm. APAC equity indexes closed mostly lower on Friday. Hong Kong’s Hang Seng Index (HSI), China’s CSI 300, and Japan’s Nikkei 225 fell by 1.18%, 0.34%, and 0.58%, respectively. Thailand and Hong Kong are slated to release trade data today, both for the month of August.

China’s yuan is likely to remain subject to a rising dollar this week. The People’s Bank of China (PBOC) has attempted to slow USD/CNH’s ascent through its daily reference rate fixing operations, which are likely to continue (albeit with limited effect, if the recent past is any indication).

Elsewhere, the South African rand is in focus as the country grapples with another round of power cuts. The country’s energy supplier, the state-owned Eskom, said that national grid outages should be expected until Thursday. USD/ZAR rose for a fourth week, bringing prices within 0.5% from the psychologically important 18.00 level.

US dollar technical analysis

The DXY Index smashed through its June 2002 high during last week’s big move. A trendline from May, which initially served as support before turning into resistance was pierced. Prices may find support at that trendline. The May 2002 high at 115.34 is a possible target, and bullish movement in DXY’s momentum oscillators supports a move higher. The Relative Strength Index (RSI) entered overbought conditions, and MACD is tracking higher above its signal line.

US dollar (DXY Index) – daily chart

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.