EUR/USD, AUD/JPY flows - rotating between US risk off and Asia risk off
AI/tech steep correction remains dominant, focal point flipping to Asia overnight
Yen remains a strong performer, vs high beta (AUD, NZD...), while dollar flip-flops back to more global haven support
Trade still dominated by the accelerated AI/tech correction out of the midterms, with Nikkei and Kospi off 6%, having been off steeper still, latter testing the early year Fed-Mar lows. Those really are even more critical lows now if the market is to avoid quite a large ‘head and shoulders-esque’ year long toppy formation. Nasdaq does see a 0.6% bounce but that is really just intraday consolidation when set against the plunge through Aug lows yesterday. This area is also key as if this is cleanly given up with speed rather than regained then that projects back to the spring lows.
Risk-off catching up with the high beta counters, AUD and NZD particularly hard hit in Asia, as risk off rotates from US to Asia, justifying the very heavy risk-off high beta yen positioning seen in recent spec data.
Notably with the severity of the recent action and its channelling to Asia, dollar regaining some lift alongside the leading yen, and then CHF, with euro in the risk-on side of the ledger (1.1100 - 1.1130 support). Sentiment and flows remaining choppy on the dollar side with bursts of negative spillover from the US-led AI retreat giving way to support on the global and especially Asia knock on. Yen still looks to remain the standout consistent performer though it all, and JGBs finding flows support in the recent shakeout.