Market Brief: Nikkei 225, USD Down; Hang Seng Index, AUD, NZD Up Ahead of the New Year

Mixed Performance in Equities and Currency Markets

The Nikkei 225 finished in the bears’ territory. Japan’s stock index was down 181.1 points or 0.76%  at 23,656.6 as today’s trading came to a close. Meanwhile, the Hang Seng Index is up over 130 points or 0.47% at 28,356.0.

AUDUSD is trading around its daily open price at 0.6988. Meanwhile, NZDUSD is slightly higher by 10 pips from where it started for the day at 0.6712. On the other hand, USDJPY is down close to 30 pips as it trades at 109.16.

Investors Square Their Positions Ahead of the New Year

There were no reports released this morning which could explain the mixed performance of equities and currency markets. There is ana overall need to re-balance portfolios among investors which could explain why the Hang Seng Index traded higher while the dollar weakness continued. Remember that Hong Kong’s stock index was heavily weighed down by pro-democracy protests in the city-state this year. On the other hand, the US dollar scored significant gains in the last quarter of the year as the Federal Reserve hinted that they would take a pause in rate cuts.

Read our Best Trading Ideas for 2020.

GBPJPY Outlook

Today’s calendar only has the Chicago PMI and New Home Sales reports from the US listed to be released. It does not mean that there are no opportunities to day trade though.

On the hourly chart of GBPJPY, we can see that the currency pair is testing support at the rising trend line (from connecting the lows of December 24 and December 27). In fact, this area around the 143.00 psychological handle also coincides with the 38.2% Fib level. If risk appetite continues to linger in today’s trading, we could see support at this level hold. A stop loss below today’s Asian session lows around 142.80 with an entry above this morning’s highs around 143.40, could yield a reward-to-risk ratio of over 7:1 if you aim for GBPJPY’s December highs around 147.80.

However, a bearish close below today’s Asian session lows at 142.98 will invalidate this trade idea. It could hint that sellers could push prices down to GBPJPY’s December 27 lows at 142.00. Also be wary of reversal candles around yesterday’s high at 143.62 because they could signal that the rally on GBPJPY could soon come to an end.

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