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Market Brief: Hang Seng, Nikkei 225, USDJPY Up Modestly On Trade Deal Hopes


The Hang Seng Index and Nikkei 225 finally recouped some of their losses as equity investors bargain hunt in today’s Asian session. Hong Kong’s stock index was up 39 points or 0.15% to 26,505.9 while the Nikkei 225 was up over 70 points or 0.32% at 23,112.88.

Meanwhile, AUDUSD is unchanged from its open price today at 0.6785 while NZDUSD is slightly up by 6 pips trading at 0.6406. USDJPY is also flat at 108.61.

Reports about China making efforts to strike a deal with the US may have fueled the market’s cautious optimism over negotiations. Chinese Vice Premier Liu He who is Beijing’s lead negotiator, has invited US representatives to China to sort out details of a potential phase one deal. This may have renewed hopes that the two countries may finalize an agreement by this year.

However, this optimism may be short-lived. The HK rights bill has been passed to US President Donald Trump for approval and it is said that he is likely to sign it into law. Earlier today, Chinese President Xi Jinping was also quoted to say that there is resilience in the Chinese economy and that they are not fazed by a trade war.

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USDJPY Outlook

USDJPY has been making lower highs and lower lows since October 31. In forex trading, this consolidation suggests that market participants are undecided on the currency pair. A break out could happen soon if a catalyst arises. This probably means that the market will wait for significant developments on trade deal negotiations.

Should the upcoming headlines suggest that a deal will not happen this year, USDJPY could fall to 108.40 and test support at the rising trend line. If it breaks, the next support level is at 107.92 where the currency pair made lows on November 1. On the other hand, if the two countries express positive rhetoric on negotiations, USDJPY could test the falling trend line for resistance at 108.70. A break at this level could push it to 109.04 where it made highs on November 18.

PMI reports from the US could also spark volatility on the currency pair. Due at 2:45 pm GMT, the manufacturing PMI for November is eyed at 51.5 while the services PMI is estimated at 51.2.

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