Equities Weak To Start, Boosting Risk Aversion: There wasn't much today on the macro calendar with market participants still reacting to Friday's NFP report (especially it seems in the currency space). The focus will be turning to US earnings this week, and stocks in the US got off to a rocky start, falling quite sharply in afternoon trading. Here's a look at the S&P500 which fell below 1820, and nullified the short-term upward channel it had established last week. The 1811 level will now become a key level to watch as it is the next level of support. Nikkei 225 futures were also on the backfoot, with the key index falling through support at 15700. This extended a downtrend started right around the New Year, and we have a downward channel in place with lower highs and lower lows. Japanese Yen is Star Performer in FX: With equities in the US and Japanese futures weakening the dominant currency was the JPY, which extended its rally from Friday against the USD, while also racking up strong gains against the EUR and GBP. Let's have a look at the USD/JPY. As we can see, the 104.00 level was cracked to begin the week, and the pair slid all the way down to 102.85 in NY afternoon trading. The momentum behind the move suggests that the JPY will continue its strength as we have some unwinding of carry trade going on (perhaps the market being too long USD prior to Friday, and now some adjustments being made). As the old saying goes when it comes to risk sentiment, "we take the escalator up, but the elevator down". This is a theme to watch going into the next trading session. Will the JPY strength continue uninterrupted, will there be some pullback which is faded, or do JPY crosses start to put in some bottoming action following the sharp slide?Though Aussie and Kiwi Gain Against EUR and GBP: While risk aversion reigned and the JPY was quite strong, it was interesting to note that the Aussie and Kiwi had good days. The AUD/JPY and NZD/JPY pairs did not fall as much as other JPY crosses, and when compared to their European counterparts (in the EUR/AUD, EUR/NZD and GBP/AUD, GBP/NZD pairs) they were quite strong. I documented the movement in those pairs in a few posts earlier in the day (read about the EUR/AUD here, and about the GBP/AUD here). Does this signal a change in the dynamics of these currencies as we have a break to a double top pattern in one, and a head and shoulders in the other? That is something to keep an eye on during the rest of the week.Bond Markets Shows Flight to Safety: In a final look, lets see the action in the US bond market, as this is a great way to gauge risk sentiment and what market participants may be thinking regarding the Fed tapering schedule. Well, its fairly clear that since the NFP data, bonds have been well bid, with bond prices rallying (and bond yields therefore falling).