Summary:

• Asian stocks explode higher following records on Wall Street
• JAP225 sees gains close to 2% in the ninth week of a strong rally
• AUDUSD sliding after the RBA decision

 Four Asian key markets are among the top gaining instruments today with JAP225 (Nikkei225) up by 1.82%, Hang Seng (HKComp) up by 1.5%, CHNComp (Hang Seng China) adding 1.23% and AUS200 advancing by 0.79%. The immidiate reason is another high on Wall Street, recorded both on US500 (S&P500) and US30 (Dow Jones) as investors seem to enjoy prospects of the Tax Plan (even if it’s passage through Congress is not a certain thing) and strong earnings season. Asian stocks were a bit mixed yesterday when especially China was under pressure of Trump’s comments in Japan but today all the markets are surging higher. 

Japan is the one especially worth looking at. The rally that started here at the beginning of September goes in line with USDJPY rebound but the pace of it exceeds weakening of the yen by far. It seems that investors, assured by another political win of Shinzo Abe bet for even more buying frenzy from the Bank of Japan and are pouring money into stocks amid low interest rates. If this weeks ends in a green (and it’s already way up) this will be the ninth consecutive week of gains that took the JAP225 well above 2015 highs with only late 80’s highs left for comparison. 

JAP225 crushed 2015 highs and keeps surging with no clear resistance in sight. Source: xStation5 

On the currency front we have another strong session for the US dollar that is gaining modestly against all the G10 peers. The Australian dollar is declining following the RBA decision but not more than other Asian currencies. In fact the Aussie actually gained in the aftermath of the decision as the statement did not point to any further easing but it quickly reversed lower. The statement pointed put that global economy was getting stronger and some data from the Australian economy was positive (especially business surveys and employment) but that consumer spending was a concern amid high levels of debt and lack of wage growth would keep inflation pressures at bay. 

AUDUSD could see more mid-term downside with the key support at 0.7320. Source: xStation5 

Looking at the AUDUSD, the 0.7740 level has been confirmed as a resistance and the pair could eye more downside with no immediate support in sight. The key mid-term level to watch is 0.7320.