Market Brief: Nikkei 225 and Risk Currencies Down, Hang Seng Index Flat in Friday’s Trading

Asian equities failed to enjoy the rally that we saw in the Dow Jones today. The Nikkei 225 closed 48.2 points or 0.20% lower at 23,816.6. Meanwhile, the Hang Seng Index is almost changed, trading around its opening price at 27,800.5.

AUDUSD, NZDUSD, and USDJPY Trading Lower

As for currencies, AUDUSD pared some of its gains from today’s Asian session. It traded as high at 0.6899 earlier today only to come back to its opening price at 0.6884. NZDUSD is down roughly 15 pips from its opening price as it trades at 0.6590 now. USDJPY is also down close to 10 pips at 109.25.

Markets Await Catalysts

It’s been a quiet Asian session. The only reports released today was Tokyo’s core CPI for December which came in as expected at 0.5%. There was also New Zealand’s credit card spending report for November. It printed higher at 4.5% than October’s reading at 2.3%.

Now that the US and China have agreed to a phase one deal, the next step is for the two countries to make it final. Currently, the terms have been subjected to review for legalities. Market participants will then be looking forward to the deal being official next month.

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USDJPY Outlook

On the hourly chart, USDJPY looks to have broken through support at the rising trend line of the bullish pennant I pointed out yesterday. Now, the previous trend line could provide resistance to the currency pair if there are enough buyers to push USDJPY higher. The area around 109.47 where the trend line is, also coincides with the 61.8% Fib level (when you draw the Fibonacci retracement tool from yesterday’s high to yesterday’s low).

On the other hand, if sellers dominate today’s trading, USDJPY may face support at the 200 SMA around yesterday’s lows at 109.16. If support here does not hold, we could see USDJPY make its way to its highs for December 5 highs at the 109.00 handle.

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