A Downtrend on the Asian Market

Asia’s Wednesday trading could have been better: The majority of indexes ended trading in the red. Japan’s Nikkei 225 fell 0.47% by the close. Sectors leading the decline were services, pharmaceuticals, and rail transport. The US dollar’s significant decline on Tuesday and the first half of Wednesday put a damper on the majority of stock markets, including Asian.
The rest of the Asia-Pacific indexes fell right after the close of US trading, in which US indexes also fell sharply after statements by Fed chief Janet Yellen. South Korea’s Kospi lost about 0.39%, Hong Kong’s Hang Seng fell by 0.61%, and the Shanghai Composite dropped 0.56%.
The USD/JPY, which hit a record high of 112.42 after Yellen’s speech Tuesday evening and a series of remarks by Fed representatives on Wednesday, began gradually falling to the 112 mark. It appears that Thursday will open in the same vein, with a target of 111.75 and support at 112.35. A strengthening yen is not very good for Japan, but investors will be noting Hirodi’s speech at 1:30 pm GMT.

The weakening dollar also provided support for commodities: Brent crude is trying to consolidate at $47/barrel, trading a bit above.

European trading was also underwhelming: At the time of this writing, the majority of European indexes, including the Europe-wide EURO STOXX 50, Germany’s DAX, France’s CAC 40, and Britain’s FTSE 100 were trading flat, despite the initial decline.
The EUR/USD and GBP/USD pairs are correcting after strong growth: in the first half of the day the euro nearly broke through 1.14 continuing yesterday’s trend, but fell during trading. Despite the market’s turbulent reaction because of speeches by 4 Central Bank heads at the same time (ECB, Bank of England, Bank of Canada, and Bank of Japan), the pair is trading at 1.1362 with a slight negative trend. It is highly likely that the market will take a cue from this movement on Thursday during the day as well.

Yuri Prokudin, Olymp Trade analyst

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