Market Brief: Asian Stocks Lose Bullish Momentum Amid Lack of Coronavirus and Trade War Updates
The Nikkei 225 finished in the red by 45.6 points or 0.19% at 23,828.0. Meanwhile, the Hang Seng Index is down by as much as 145.6 points or 0.53% 27,346.7. The Shanghai Composite Index, on the other hand, is in the green by 9.454 points or 0.33% at 2,875.964.
Yesterday, Asian stocks traded higher yesterday following China’s announcement that it would reduce tariffs on US goods as early as next week. Optimism brought about by news of a coronavirus vaccine also helped buoy sentiment. However, these reports were left unconfirmed. WHO even announced that there is no proven cure yet.
Consequently, without any significant updates on the coronavirus and the trade war today, equities markets gave up some of their gains.
Risk currencies are also trading lower today, ahead of the US NFP report. NZDUSD is leading losses by 0.21% despite a higher Inflation Expectations report. According to the RBNZ, it sees inflation for Q1 2020 to come in at 1.93%, up from its last reading at 1.80%. Meanwhile, AUDUSD is trading lower by 0.20% as the RBA statement reminded market participants that a rate cut is not off the table.
Later today, the US NFP report is due for release. Scheduled at 1:30 pm GMT, it is expected to show that 163,000 jobs were added to the economy in January and that unemployment is still at 3.5%. Meanwhile, average hourly earnings for the month is expected to post a 0.3% uptick.
On the 4-hour time frame, we can see that AUDNZD has been on a medium-term uptraden. This is evidenced by the rising trend line that becomes apparent when you connect the lows of February 3 and February 4. In fact, a hammer has formed at the trend line support. This price, around the 1.0400 handle, also coincides with the 50% Fib level when you draw the Fibonacci retracement tool from the low of February 5 to yesterday’s high. This candlestick pattern is often interpreted as a bullish confirmation. It could mean that AUDNZD may soon rally to yesterday’s highs around 1.0450.
On the other hand, a close below today’s Asian session lows at 1.0396 may hint that there are still sellers present. AUDNZD could then fall to 1.0380 and test the 100 SMA and 200 SMA for support. If it does not hold, it may drop to its January 27 low at 1.0315.