Market Brief: Nikkei 225, Hang Seng, and USDJPY Trade Higher on Cyber Monday

Asian equities markets are off to a bullish start this Cyber Monday. The Hang Seng index closed 98.2 points or 0.37% higher at 26,444.7. Meanwhile, Nikkei 225 was up 235.6 points or 1.01% at 23,529.5. As for USDJPY, the currency pair is trading higher at 109.68 after opening at 109.51.

Caixin Manufacturing PMI Beats Forecasts

Positive data on China’s manufacturing industry put market participants in a risk-on mood despite problems looming over the horizon.

According to Markit, the industry continued to expand in the month of November. The Caixin Manufacturing PMI printed higher at 51.8 than it’s October reading at 51.7. It also topped the consensus which was at 51.5. This was good news because numbers over the baseline reading of 50.0 indicates that business executives see that the manufacturing industry is expanding.

In fact, the report from China was enough for investors to ignore the recent developments in Hong Kong. Last week, US President Donald Trump signed the Hong Kong Democracy and Rights Bill into law. China is widely expected to retaliate following the move. They have warned that they will impose tariffs on US-imported goods. On top of that, protests in Hong Kong resumed over the weekend.

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USDJPY Outlook

The rally on USDJPY hinges on the roster of top-tier economic data due from the United States this week. On the weekly chart, the currency pair is testing a confluence of resistance. One, is from the falling trend line. The 100 SMA and 200 SMA are also limiting any upside move. However, a strong bullish candlestick closing above the 110.00 psychological handle could be the start of a rally to 2019 highs at 112.40.

Later today, the ISM manufacturing report is due at 3:00 pm GMT. It is eyed to show that manufacturing activity was still in contraction in November at 49.2. However, with the forecast higher than the reading for October at 48.3, improvements in the industry are anticipated to reflect in the report.

Then on Wednesday, the ISM non-manufacturing report is eyed to print at 54.5.

The biggest report due this week is the non-farm payrolls report. It is scheduled on Friday and is estimated to show that 189,000 jobs were added to the economy in November.

Disappointing figures may push USDJPY lower to support. In fact, if the reports terribly miss forecasts and trigger speculations of further easing from the Fed, we could see the currency pair re-test its 2019 lows at 104.40.

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USDJPY weekly chart

USDJPY weekly
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