Just like their US counterparts, Asian stock markets scored gains in today’s trading as coronavirus fears abated on optimistic remarks by central bankers. The Nikkei 225 finished 175.3 points or 0.74% in the green at 23,861.2. Meanwhile, the Hang Seng Index extended its gains today, trading around 300.0 points or 1.10% higher at 27,890.2. The Shanghai Composite Index is also up by 25.225 points or 0.87% higher at 2,926.899.
The Fed and RBNZ Do Not Seem Worried About the Impact of Coronavirus
Federal Reserve Chairman Jerome Powell shrugged off concerns about the coronavirus in his speech at the US Congress yesterday. He said that the US economy was in a “very good place” and did not seem concerned about the impact of the outbreak. He said that it is still too early to tell how much of an effect the coronavirus would have on growth. As of now, the Federal Reserve does not see any reason why expansion would stall.
The same sentiments were reflected in the RBNZ statement earlier today. According to the central bank, they do not see the need to further ease monetary policy unless the coronavirus adversely affects the economy. NZDUSD jumped following the more-hawkish-than-expected statement. Other risk currencies like the Aussie and Loonie also benefited from risk appetite. AUDUSD is up 0.28% for the day at 0.6733 while USDCAD is down by 0.07% at 1.3277.
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USDJPY Outlook
On the 4-hour time frame, we can see that USDJPY has been making lower highs and higher lows after staging a 170-pip rally on the first week of February. A bullish pennant chart pattern has consequently formed. This is considered as a bullish continuation pattern in forex trading. A bullish close above the 110.00 handle may mean that USDJPY could soon trade to its January highs around 110.30 or maybe even rally to resistance at 112.00.
On the other hand, a close below 109.60 would invalidate this bullish chart pattern. It could signal that USDJPY may drop to its January lows at 108.30.
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