Nikkei 225: Nasty risk-off turnaround wipes early gains

By FXStreet FXStreet (Bali) – The Nikkei 225 eliminated most of its early gains, with dealers exchanging quotes around 18,300 at one stage (near +2%) before a round of selling, now exacerbated by the BoJ unchanged policy decision, took the benchmark Japanese index near 18,000k, now up just around +0.4% for the day.

Shanghai, ASX deep in the red

Meanwhile, the Shanghai Composite, which saw an ugly open trading below 2%, kept the losses while no more bloodbath for the weak-handed longs has been seen so far, which should be a victory on its own. In Australia, the ASX200 has also seen a nasty turnaround, now down over 1%, as the risk averse environment settles in.

Risk aversion, BoJ stays pat = Yen demand surges

One of the key elements fueling Yen demand, other than the risk-averse dynamics well established in the markets since August – sporadic risk-appetite swings should be seen as corrective within bigger risk-off picture if one judges by risk-premium paid in Yen options market – , could also be the fact that the BoJ provided no hints about any possible increase in QQE in October. More QQE, while not a ‘clear cut’, has taken the spotlight in recent weeks, especially after last …read more

Source:: FX Street