Nikkei 225

Market Brief: The Fed’s Massive QE Program Boosts Nikkei 225, Hang Seng, and AUDUSD

Asian stocks finished in the green in today’s trading after the Federal Reserve committed to a massive QE program yesterday. The Nikkei 225 finished with a 7.13% or 1,204.57-point profit. Meanwhile, the ASX 200 closed 4.17% or 189.7 points higher at 4,735.7. The Shanghai Composite Index was in the green by 2.34% or 62.271 points at 2,722.438. As for the Hang Seng Index, it is still open but it looks poised to finish higher. As of this writing, it is trading 4.41% or 960.0 points higher at 22,651.9.

As reported by my colleague Eno Eteng yesterday, the Federal Reserve announced an open-ended quantitative easing program. Previously, the central bank had a limit to its bond purchases. With this, policymakers are committed to inject as much cash into the economy as it would take to smoothen market functions.

Later today, the US Senate is expected to pass a bill for fiscal stimulus measures in the country. This would involve the government giving out cash amount to $,1000 for adults and $500 to children in an effort to stimulate the economy.

Risk currencies are also benefiting from the Fed’s move which weakened the US dollar. AUDUSD is leading gains by 2.24%, up 131.6 pips from its opening price. NZDUSD is the second-biggest gainer at 1.83%. Meanwhile, USDJPY is the biggest loser among the majors. It is currently down by 0.81%.

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AUDUSD Outlook

On the 1-hour time frame, it can be seen that AUDUSD has been making steady highs and higher lows. Consequently, an ascending triangle has formed. This is widely-considered as a bullish indicator. This is because the market’s higher lows indicate the presence of buyers in the market. A strong bullish close above resistance around 0.5965 means that AUDUSD may soon rally to its March 16 highs at 0.6180.

On the contrary, reversal candlesticks at the top of the triangle could mean that AUDUSD may soon fall. Near-term support is around 0.5815 where the bottom of the channel coincides with the 100 SMA.

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AUDUSD, 1-hour chart

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