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Nikkei posts third consecutive weekly loss, Two-year JGB yield hits record low

FXStreet (Mumbai) - Japanese equity markets fell today, posting a third straight weekly loss, led by the banking and the exporter shares. The sharp fall in the Japanese equity markets pushed the two-year Japanese government bond (JGB) yield to record low levels.

Nikkei ended 1.40% lower at 14,532 levels today posting a drop of more than 5% from the last week’s closing level of 15,304. Meanwhile, the two –year JGB yield tumbled below the previous record low of 0.01, to hit a new low of 0.005%. Moreover, the yields were already on the decline due to the Bank of Japan’s bond buying program. However, the yields fell to a new low primarily due to the risk aversion in the financial markets this week.

The fall in the Japanese stock markets this week was also driven by a sharp decline in the USD/JPY exchange rate. The USD/JPY pair now trades at 106.52, down from a recent high of 110.11. The slump in the equity markets may continue in the next week if the Yen continues to appreciate against the US Dollar.

Nikkei Technical levels

The Nikkei has breached a critical support level of 14,753 on the weekly chart. The index has a strong support around 14,300 levels. On the higher side, the index has to breach 14,753 levels post which prices can rally to 15,000 levels.

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