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Market Brief: Nikkei 225, Hang Seng, and Risk Currencies Up on Trade Deal Progress

The Nikkei 225 was slightly higher in today’s trading by 54.3 points or 0.23% at 23,354.4. Meanwhile, the Hang Seng index is currently up by 280 points around 1.07% at 26,497.5. NZDUSD has also extended its gains. The currency pair is up roughly 17 pips from its opening price at 0.6558. AUDUSD is also modestly higher by around 10 pips at 0.6840.

Progress on US-China Trade Talks?

Risk appetite seems to have picked up in today’s Asian session on news that trade negotiations between the US and China are going well. Earlier today, it was reported that China will waive tariffs on some purchases of farm products like soybeans and pork from the US. This triggered risk appetite because the move is seen as an act of good will from China. Now, market participants are hoping that the US would reciprocate by lifting tariffs on Chinese goods.

A few analysts warn not to get too excited about a trade deal being signed soon. They point out that China has not committed to a specific number on farm purchases which is what the US wants.

Japan Leading Indicators Fail to Impress

Earlier this morning, the Cabinet Office released its Leading Indicators report for October. It printed at 91.8% which was slightly lower than the 93.1% forecast. The report measures 11 indicators that cover employment, stock prices, and consumer confidence among other factors in an effort to predict the direction of the economy.

New Zealand Dollar Continues to Extend Gains Against the US Dollar

Meanwhile, the New Zealand dollar was the strongest among the major currencies against the US dollar in today’s Asian session. The rally in the commodity currency was fueled by comments from RBNZ Deputy Governor Geoff Bascand. According to him, economic growth could soon benefit from the government’s fiscal stimulus as well as rising commodity prices. He assured that the new capital requirements set by the RBNZ will not dampen economic health. And while he warned that there are still downward risks, he said that the economic outlook is now more balanced.

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AUDUSD Outlook

While NZDUSD is trading at multi-month highs, AUDUSD looks like it is still stuck in a consolidation. In fact, when you connect the highs and lows from December 3 on the hourly time frame, you will see that a symmetrical triangle has formed.

A strong close above yesterday’s high at 0.6853 could mean that AUDUSD will soon make its way to its November highs around 0.6911. On the other hand, a close below yesterday’s low at 0.6820 may mean that the currency pair will soon drop to support around 0.6758.Download our latest quarterly market outlook for our longer-term trade ideas.

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