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Market Brief: Nikkei 225 Up While Other Equities Markets Are Down; NZDUSD Tests Trend Line

Nikkei 225
Nikkei 225

Asian equities markets are mixed in today’s trading. The Nikkei 225 finished in the green at 24,025.2, up 164.6 points or 0.73%. On the other hand, the Hang Seng Index is down roughly 150 points or 0.52% at 28,807.8. The Shanghai Composite Index is also in the red by 8.749 points or 0.28% at 3,106.820.

Nikkei 225 Buoyed by Risk Appetite

The Nikkei 225 benefitted from the general sense of risk appetite that has been dominating market sentiment. Most of it is driven by optimism for the US-China Phase One Deal which is due to be signed tomorrow. We were also reminded by China’s commitment to buy up to 200 billion USD worth of US goods in the next four years by reports that came out earlier today. China’s trade balance also came in as a pleasant surprise at 46.8 billion USD. It was only anticipated to print at 45.8 billion USD.

Lastly, the US Treasury’s semi-annual list of currency manipulators had China missing. This was praised by Chinese officials saying that the report reflected the “truth”.

Hang Seng Index, Shanghai Composite Index, AUD, and NZD Weighed by China’s Debt Problems?

On the other hand, the Hang Seng Index and Shanghai Composite Index seemed to have been weighed down by fiscal worries for China. There are concerns that China’s commitment to buy a staggering amount of US goods may exacerbate the country’s debt issues and usher them into the spotlight.

The performance in the equities markets were also mirrored by, AUDUSD and NZDUSD. Both of which fell at the wake of reports on China’s purchase requirements. They are almost unchanged from their opening prices at 0.6900 and 0.6626, respectively. USDJPY, on the other hand, is up around 0.07% at 110.01.

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NZDUSD Outlook

On the daily time frame, we can see that NZDUSD is currently testing trend line support (from connecting the lows of November 13 and November 29). This price, around 0.6620, also coincides with the 38.2% Fib level when you draw the Fibonacci retracement tool from the low of November 29 to the high of December 31. Reversal candles around this level could mean that NZDUSD is on its way to its December highs at 0.6754. On the other hand, a strong bearish close below the trend line could mean that the currency pair may soon drop to 0.6533. This price coincides with the 61.8% Fib level and another rising trend line (from connecting the lows of October 1, October 16, and November 13).