Yen keeps strengthening against its counterparts

Yen keeps strengthening against its counterparts

AUD/JPY falls a full figure and approaches the 81.88 level, as Yen strengthens.

The global epidemic situation keeps getting worse. It is bringing the market's focus to the risks derived from a resurgence of the pandemic crisis, with a possible return to mobility restriction measures, confinements and with it a decrease in productive activity and the service sector. The new COVID-19 cases worry the markets, especially in Europe, where some countries have not achieved an optimal vaccination rate.

Yesterday's market movements are characteristic of a scenario of increased risk aversion, which is especially noticeable in the forex market with significant falls in all crosses of the Yen. The Japanese currency acts as a safe haven in situations of fear in the market and strengthens against all its counterparts.

One of the most punished pairs was the AUD/JPY that fell a full figure, 100 pips, near the end of the North American session and is approaching the level of 81.88 that now acts as a pivot point coinciding with the 100-day SMA line.

GráficoDescripción generada automáticamente

Another asset affected by the change in market sentiment towards risk-off is oil.

After several days of consolidation with oscillating movements up and down without a defined direction, crude oil has broken down after the International Energy Agency's decrease in demand forecasts published for next year. Another factor that paved the way for the crude oil to break down is the threat of the release of strategic reserves by the United States and OPEC's refusal to increase production

Oil traded below month lows at $78.24 and is heading towards the 38.2% Fibonacci retracements of the last bullish leg at $76.53.

The most affected stock index was the DowJones 30, as this index contains a more significant proportion of stocks linked to growth than in the event of a new crisis due to COVID-19 contagions; they would be the ones that would have the most to lose.

The DowJones30 index closed at the lows of the day with a loss of 0.72% and technically began to show signs of a deeper correction that could take it to the first Fibonacci retracement levels, at the 35.290 zone.

Sources: Bloomberg, Reuters

This information/research prepared by Miguel Ruiz (“the research analyst”) does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.

The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.

JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors