The Hang Seng Index tumbled over 1,200 points, or 5% over the last two weeks.

The selling was accompanied by emerging market outflow as the US dollar surged to a decade’s high. The fast depreciating of RMB also urged outflow from the China market, further weighing on Hong Kong equities.

Technically, the Hang Seng Index has fallen to a key support level at around 21,800 points, which is also the 61.8% Fibonacci extension level. Breaking below this level will open the floor to further downside, pointing to 21,360.

In Singapore, the SGX’s daily equity trading volume fell to around S$900m recently, as year-end trading activities shrank. A relatively quiet calendar towards the end of the year suggests that the Straits Times Index may range between 2,900-2,960 points, unless we see a “window-dressing” rally next week.

Today’s BOJ interest-rate decision is a key event, and the market is anticipating no change in the BOJ’s policy rates this time. USD/JPY retraced to the 117.25 area as the market positions itself for any potential surprises. Near-term support and resistance levels for USD/JPY are around 115.5 and 119.4 respectively.

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