25-OCT-2018, THURSDAY

1) ASX 200 Dives Through Support, Following S&P 500. Euro Eyes ECB
2) GBP/JPY Price Outlook: Bears Pound Support to Fresh Lows
3) Aussie, Kiwi Dollars at Risk Amid Market Turmoil

1) ASX 200 Dives Through Support, Following S&P 500. Euro Eyes ECB

As anticipated, Asia Pacific benchmark stock indexes plunged, echoing the aggressive selloff on Wall Street where the S&P 500 nearly wiped out all of the progress it made this year thus far. The Nikkei 225 gapped considerably lower and was down as much as 3 percent on Thursday as it headed for its lowest close since April. In the absence of major economic event risk, markets are focusing on the broader fundamentals. China’s Shanghai Composite was down about 1.42% heading into Thursday’s close as it continued paring gains from last week’s disappointing third quarter GDP data. Australia’s ASX 200 dropped about 2.22 percent, weighed down by all of its sectors as it headed for its lowest close of this year at this moment in time. South Korea’s benchmark KOSPI index was down more than two percent.

Looking at FX markets, the anti-risk Japanese Yen was cautiously higher against some of its major counterparts. Notable outperformers were the Australian and Canadian Dollars. This may have been due to weakness in the US Dollar, which coincided with a drop in the Nikkei 225. The greenback does boast the highest yield of the majors and this may have worked against it as sentiment deteriorated for now.

Over the remainder of the day, we do have the ECB monetary policy announcement, there may be chance that the Euro and equities brush off this event risk as policy is already on a preset course with few projections expected come. As such, risk trends may continue being the dominant driver for markets. S&P 500 futures are pointing cautiously higher, suggesting that a pause in the global stock selloff could ensue.

2) GBP/JPY Price Outlook: Bears Pound Support to Fresh Lows

The British Pound has plummeted more than 3% from the monthly highs against the Japanese Yen with GBP/JPY probing fresh seven-week lows today. There may be some recovery form levels just lower but the risk remains lower while below the weekly open. Here are the updated targets and invalidation levels that matter on the GBP/JPY charts.

GBP/JPY broke below a multi-week consolidation range and keeps the focus lower while within this near-term formation. From a trading standpoint, look to reduce short-exposure / lower protective stops on a drop towards 143.64- expecting a larger reaction there for guidance as we look for a late-month low in price.

3) Aussie, Kiwi Dollars at Risk Amid Market Turmoil

The rise of this kind of resource-oriented protectionism is yet another among a multitude of factors that are weighing down emerging markets. The raging trade wars fueled by the recent surge in US-led protectionism and the strengthening US Dollar – the latter a function of an increasingly hawkish Federal Reserve – have been the primary forces driving global risk aversion.

Many developing countries have their debt denominated in the Greenback. This has made it more difficult for governments in emerging markets to pay back their debt, especially against the backdrop of a global slowdown. Cycle-sensitive assets like the Australian and New Zealand Dollar have also been on a steady decline since the beginning of the year.As risk appetite continues to fade among investors, the Aussie, Kiwi, emerging markets and other growth-anchored assets are likely to suffer.