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Market Brief: Nikkei 225 and Hang Seng Down, USDJPY Higher on BOJ Decision


The Nikkei 225 finished in the red, down by 69.6 points or 0.29%, at 23,864.9. Meanwhile, the Hang Seng Index is trading about 120 points or 0.45% lower at 27,756.9.

On the contrary, risk currencies are trading higher. AUDUSD is up close to 30 pips at 0.6880. NZDUSD is trading higher than its opening price after bottoming out at 0.6574. It is now at 0.6593. USDJPY is trading slightly higher around 109.60 after opening at 109.52.

Trump Impeachment Case to Take the Spotlight?

Last night the House of Representatives voted to impeach US President Donald Trump. The basis for the impeachment is abuse of power and obstruction of investigation. It could be that Asian equity markets like the Nikkei 225 and Hang Seng Index were weighed down by the news. However, it has not made a big noise in other markets since the next move will be for the articles of impeachment to be sent to Senate. Analysts say that it is unlikely for Trump to get impeached in the Republican-dominated Senate.

Australian Labor Market Figures

In today’s Asian session, Australia generated 39,900 jobs in November. The report topped forecasts which were for a modest increase of 14,500. We also saw the unemployment rate tick lower to 5.2% from 5.3% in October. Consequently, the report pushed AUDUSD higher up the charts.

BOJ Rate Decision

Earlier today, the Bank of Japan (BOJ) also announced their interest rate decision. There were no changes made to the current official cash rate at -0.10%.

BOJ Governor Haruhiko Kuroda was optimistic about the global economy, saying that the outlook is now “brighter than a few months ago.” He also did not see a risk of stagnation to the Chinese economy which has been one of the key engines for global growth.

He also expressed optimism on the Japanese economy, commenting that it is growing moderately. The central bank is also open to taking rates into negative territory even further but they acknowledge that they cannot keep rates in the red indefinitely.

Read our Best Trading Ideas for 2020.

USDJPY Outlook

On the 4-hour time frame, we can see that USDJPY has been stuck in a consolidation since last week. In fact, when you connect the currency pair’s most recent highs and lows, you can see that it has formed what looks like a bullish pennant. Now, in forex trading, this is often interpreted as a bullish signal. It is worth noting, however, that the chart pattern materialized at a resistance level around 109.70.

A bearish close below yesterday’s low at 109.38 would invalidate the bullish pennant. It may hint that sellers are more dominant and could push USDJPY support around the 100 SMA and 200 SMA at the 109.00 handle.

On the other hand, a strong close above 109.70 may mean that the currency pair could soon rally to its year-to-date highs at 112.36.

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