Risk appetite pushed Asian stocks higher in this morning’s trading on optimism fueled by easing measures launched by central banks. The Nikkei 225 finished today’s trading 1.08% or 228.91 points higher at 21,328.90. Meanwhile, the Shanghai Composite Index posted a 1.99% or 60.011-point profit at 3,071.677. The Hang Seng Index also looks on track to finish with gains. As of this writing, it is up by 2.10% or 552.5 points at 26,775.8.
Yesterday, the HKMA and BOC announced cutting their official cash rates. Earlier this week, the RBA and Federal Reserve also lowered theirs. These efforts are expected to support the global economy as it is weighed down by the coronavirus outbreak. It also helps that reports coming out of China, the epicenter of the infection, suggest that conditions are improving. A handful of companies have gone, while others are working to get back into normal operations. The Chinese government has also announced that it would provide ample liquidity for the province of Hubei.
On the other hand, currencies are mixed in today’s trading. USDCAD leads gains at 0.14% after the BOC’s 50-point rate cut yesterday. It is followed by NZDUSD which is up by 0.11%. Meanwhile, AUDUSD is unchanged.
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NZDUSD Outlook
On the 4-hour time frame, we can see that the recent rally on NZDUSD was enough for the currency pair to test resistance. By connecting the highs of January 24, February 12, February 17, and March 3, we can see that NZDUSD is trading at the falling trend line at 0.6305. This price also coincides with the 38.2% Fib level when you draw the Fibonacci retracement tool from the high of February 12 to the low of February 28. Reversal candlesticks around this area could mean that NZDUSD may soon retest its March 2 lows at 0.6193.
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On the other hand, the hourly chart suggests that there could be enough buyers in the market. The currency pair has made higher lows after a series of lower lows. Consequently, an inverse head and shoulders pattern has formed. A strong bullish close above the high of March 3 at 0.6324 would effectively break the neckline resistance. It could mean that NZDUSD would soon rally to near-term resistance at 0.6360. If resistance does not hold, the next ceiling could be at 0.6480.More content
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