Market Brief: Nikkei 225, Asian Stocks, USDJPY Give Up Gains Ahead of US Jobless Claims

Nikkei 225
Nikkei 225

Gains on the Nikkei 225 were cut short today. After three consecutive days of closing in the green, the Japanese stock index closed with a loss today. The Nikkei 225 was down by 4.51% or 882.03 points at 18,664.53. The Shanghai Composite had a more modest loss at 0.60% or 16,680 points at 2,764.911. As for the Hang Seng Index, it is still open. Currently, it is in the red by 0.95% or 222.8 points at 23,303.8.

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There two possible reasons for the lackluster performance of Asian equities markets. For one, the US Senate finally passed the $2 trillion coronavirus relief package earlier today. This milestone has been widely anticipated for some time and was even credited for fueling risk appetite. Now that it has been passed, investors may have gotten out of the markets.

Second, there is a general sense of worry with the US unemployment claims due later today. It is expected to print at 1.648 million when it is released later at 12:30 pm GMT. The concern is that a bigger-than-expected number could raise skepticism if the government’s fiscal package would be enough.

Meanwhile, major currencies are mixed in today’s Asian session. USDCAD is trading higher after the Canadian government released its own coronavirus relief package. Meanwhile, the euro is holding on to some gains against the US dollar, by 0.24%, despite negative data from Germany. Meanwhile, USDJPY is down by the most at 0.59%.

USDJPY Outlook

On the 1-hour time frame, it can be seen that the short-term uptrend on USDJPY is no longer valid. This is apparent when you connect the lows of March 20, March 23, March 24, and March 25 and see that the currency pair is trading below the trend line. USDJPY has even formed a bearish flag which could indicate a bigger sell-off. A close below today’s Asian session lows at 110.44 could mean that the currency pair could fall to support at 109.40.

Alternatively, a close above the 100 SMA at 110.84 could indicate that there are still buyers in the market. Should this happen, USDJPY may retest its recent highs at 111.50.

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