Warnings from the Far East
Recent dynamics between the currencies of the Far East – Japan, South Korea, China – are worth paying attention to.
Both the Korean Won and Chinese Renminbi have performed consistently well recently. The Won has been the best performing currency over the past two months, while the Renminbi has strengthened against the USD ever since June.
The Japanese Yen has been rather trendless in comparison. However, it is the currency that should now be watched closely because it nearly always does well when market volatility rises, even if momentarily.
The charts below are now indicating a short-term trend shift in favour of the Yen and against the Won and Renminbi. In fact, the JPY is beginning to look attractive almost across the board, even against Gold and Silver.
This amounts to another sign in global markets that the days ahead will continue to be precarious. So far this week we have already seen a wobble in equities, a bounce in Bonds, a small pop on the VIX Index, and a slip in the Oil price as highlighted yesterday in a note called Red October. Looking at these FX charts we now have a more rounded picture that there is still more pain ahead for market optimists.
It is no coincidence that these warnings from the Far East are emerging just before the big event in the Far West.
Daily charts and technical commentary below.
We are now trading below the key levels around 15.57 having peaked twice at 15.88. A move down to 15.26 is expected
South Korea’s Won has been the best performer for the past two months. The trend down here shows signs of weakness with triple momentum divergence and highlights the risk of a squeeze up to 11.08-11.12. A breach of that zone would be a more concerning development should it unfold.
The Gold chart warns that this consolidation may end like the previous one in just a few days (on the eve of the election or on the day itself perhaps?)
Silver in JPY terms is already beginning to slide and would be weaker still below 2,482. Thereafter a move down to last month’s low would be the risk – 10% below current levels
SKA