Market Brief: Nikkei 225 & Hang Seng Up on Risk Appetite; Currencies Mixed

The Nikkei 225 finished today’s trading 113.8 points or 0.47% higher at 24,066.1. The Hang Seng Index also looks on track to finish today in the green. As of this writing, the Hong Kong stock index is over 300 points or 1.10% higher at 27,811.8.

USDJPY is trading slightly higher at 109.51 from its opening price at 109.54. Meanwhile, AUDUSD is lower following the RBA meeting minutes. On the other hand, NZDUSD is unchanged at 0.6595.

Risk Appetite Boost Asian Equities

Gains across Asian equities markets can be attributed to risk appetite stemming from the US-China phase one deal. If you remember, US officials announced that they would roll back existing tariffs on Chinese goods last Friday. They also cancelled additional levies which were supposed to be implemented last Sunday. In exchange, China agreed to buy up to 200 billion USD-worth of US goods for the next two years.

ANZ Business Confidence Improves in December

The only economic report released in today’s Asian session was the ANZ Business Confidence report. According to it, optimism among executives improved in December. The report printed at -13.2 which is better than the -26.4 reading we saw for November. ANZ analysts point out the strength in the manufacturing and services sector for the improvement. They also said that construction lags but is showing signs on improvement.

RBA Warns of Further Easing

Meanwhile, in Australia, the minutes of the last RBA meeting minutes were released. The report hinted that while the central bank kept rates steady at 0.75% in their last meeting, they will not hesitate to cut rates if they deem necessary. This means that disappointments in economic data will likely lead to more easing in the coming months.

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AUDJPY Outlook

AUDJPY is trending higher as evidenced by the higher lows that the currency pair is making on the daily time frame. In fact, when you connect the lows from August 26, October 10, and December 10, a rising trend line becomes apparent.

As of this writing, AUDJPY is finding support at the 200 SMA which also coincides with the 38.2% Fib level (when you draw from the low of December 10 to the high of December 13). If sellers dominate trading for the next few days, we could see the currency pair trade lower to 74.30 and test support at the rising trend line.

On the other hand, a bullish close above the December 13 highs could mean that AUDJPY may soon test resistance at its year-to-date highs around 80.66.

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