Market Brief: Nikkei 225, Hang Seng Index Up; USDJPY Stages A Strong Comeback. Time to Buy?

Nikkei 225, Hang Seng Index, Shanghai Composite Benefit from Risk Appetite

Asian equities markets finished on a strong note this week as market sentiment improved. The Nikkei 225 closed in the green by 110.7 points or 0.47% higher at 23,850.6. Meanwhile, the Hang Seng Index, is currently up by over 60 points or 0.22% at 28,627.1. The Shanghai Composite Index is also in the bulls’ territory, as it trades at 3,096.034 or 0.03% higher than where it opened today.

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It would seem that recent remarks from US and Iran officials which indicate an end to violence were enough to appease investors. Remember that on Wednesday, US President Donald Trump said that the US will not respond to Iran’s attack on its military bases in Iraq. Meanwhile, Iranian Foreign Minister Mohammad Javad Zarif announced that its missile attacks “concluded” the country’s retaliation for the death of Iranian General Soleimani.

AUDUSD Trades Higher on Positive AU Report

Risk appetite is also being reflected in currency markets with risk currencies like the Aussie and Kiwi trading higher. AUDUSD is up roughly 20 pips from its opening price as it trades at 0.6879. NZDUSD is today’s second-best performer the Asian session, up close to 10 pips at 0.6624. Meanwhile,

The Aussie found bids in this morning’s trading on positive data from Australia. It was reported that consumer spending for November grew by 0.9%. This was more than what analysts had predicted with the forecast only at 0.4%. We also saw an upward revision to the reading for October which was initially reported at 0.0% and changed to 0.1%.

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USDJPY Outlook

The performance of USDJPY in this week’s trading has been interesting, to say the least. After initially dropping on risk aversion, the currency pair staged a strong comeback and rallied close to 200 pips from its intra-week lows. As of this writing, USDJPY is up about 6 pips at 109.57. What’s more interesting is its technical setup on the weekly chart.

Initially, resistance held at the falling trend line (from connecting the highs of September 30, 2018, December 2, 2018, April 21, 2019, and December 15, 2019). In fact, last week’s candle closed as a convincing bearish candle. However, the bullish rally on USDJPY this week seems to have overshadowed its weakness last week, quite literally. If there are enough buyers in today’s trading, a close above resistance at the trend line and the 100 SMA and 200 SMA at 109.80 could mean that USDJPY is headed to 112.35. This price is where the currency pair hit highs in March 2019. On the other hand, if this week’s candle is unable to close above the trend line and SMA’s it could resume its downtrend. The next major support level is at its September 2019 lows at 104.92.

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US NFP Report to Dictate Direction on USDJPY

The fate of USDJPY in today’s trading will likely depend on the US NFP report due to be released at 1:30 pm GMT. The headline jobs figure is seen at 162,000 while the unemployment rate is eyed at 5.8%. Meanwhile, average hourly earnings is estimated at 0.3%.

Better-than-expected data could be bullish for USDJPY. On the other hand, disappointing figures could weigh down the currency pair.