Nikkei 225 smashed lower but USD/JPY holds its ground

Several days ago we warned readers about the unusual amount of volatility in the Nikkei 225 and hit when seen at extreme levels was often a warning of a significant trend change. Well, look at the Nikkei 225 again this morning and see it has been hammered once more. The index has fallen below 63k where it had closed yesterday at 66,835. 

The more than 5% slide in the Nikkei comes as the KOSPI in South Korea crumbles more than 6% and it seems like it is Korea that is leading the meltdown again. Now in days gone by such a slide in the Nikkei would have seriously dented the USD/JPY. Well, so far that has not happened and if anything the dollar is a little higher this morning. 

We have explained many times before; why that shift in the more usual dynamic has played out, but we remain wary that one day it will revert and if it does then watch out on the USD/JPY. The range seen so far today has been covered by 162.32 and 162.47. That is simply amazingly tight given the move in stocks. The dollar closed in the US last night at 162.39. The USD/JPY is currently trading at 162.41