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Market Brief: Nikkei 225, Hang Seng Index in the Red as US and China Sign Phase One Deal

Nikkei 225
Nikkei 225

Buy the Rumor, Sell the News on US-China Trade Deal?

It would seem that the excitement over the US-China Phase One Deal has finally died now. Asian equities market were in the bearish territory today as investors begin to realize that it’s a long road ahead for the two countries as they negotiate further trade deals. The Nikkei 225 finished today’s trading in the red by 108.6 points or 0.45% at 23,196.6. Meanwhile, the Hang Seng Index is down by 111.5 points or 0.39% at 28,773.6. The Shanghai Composite Index is also trading lower at 3,090.038, down 16.783 points or 0.54%.

Risk currencies also shared the same fate. AUDUSD is down around 0.27% at 0.6882 while NZDUSD is in the red by 0.15% at 0.6605.

US and Chinese negotiators are scheduled to sign their agreement today. They are set to then announce details of the deal and markets are looking forward two things. First, they want to know how much US goods the Chinese are committed in buying. Estimates is for a number around 200 billion USD. Anything below this could dampen market sentiment and send equities markets even lower. Secondly, investors want to know how much tariffs the US is going to reduce on Chinese goods.

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AUDNZD Outlook

On the 4-hour time frame, we can see that AUDNZD seems to have already broken through resistance at the falling trend line (from connecting the highs of December 13, December 30, January 3, and January 13). However, the currency pair’s advances seems to have been limited by the 200 SMA. Now, if there are enough buyers in the market, we could see AUDNZD find support around 1.0400 where the 200 SMA is. This area also coincides with the broken trend line and is between the 23.6% and 38.2% Fib levels (drawing from the low of January 8 to the high of January 14). However, if there are not enough buyers, a bearish candlestick could mean that AUDNZD may soon fall to its January lows at 1.0320.