- Summary:
- Asian equities markets are down as fears of the coronavirus mount ahead of the Chinese New Year. Meanwhile, NZDUSD looks like its ripe for a big drop.
Asian stock markets are in the red in today’s trading as fears over the coronavirus mount ahead of the Chinese New Year. Nikkei 225 finished today’s trading 235.9 points or 0.98% lower at 23,795.4. The Shanghai Composite Index is also down by 84.226 points or 2.75% at 2,976.528. Meanwhile, the Hang Seng Index, is still in the red by 469.0 points or 1.66% lower at 27,874.1.
According to the China’s People’s Daily newspaper, people in Wuhan have been banned from leaving the city. This was a bold move from the government considering that the city is a major transport hub and is home to 11 million people. Initially, risk appetite picked up following the news because it reflects the government’s commitment to contain the infection. However, stocks soon traded lower as soon as investors realized the impact of this (as well as the coronavirus as a whole) to businesses.
Some of the biggest-losing stocks in today’s trading are in the retail and entertainment sectors. Galaxy Entertainment Group Ltd. which owns and operates casinos in Macau is down by 3.56%. Wharf Real Estate Investment Co. Ltd. which manages hotels in Hong Kong is in the red by 3.26%. Family Mart which runs convenience stores in Japan scored a 3.42% loss.
As for currencies, AUDUSD is trading higher today by 0.42% following the positive Australian labor report. Meanwhile, NZDUSD is virtually unchanged from its opening price at 0.6592.
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NZDUSD Outlook
On the 4-hour time frame of NZDUSD, we can see that the currency pair has made lower highs after a series of higher highs. Consequently, a head and shoulders chart pattern has formed. When you enrol to our forex trading course, you will learn this is widely considered as a bearish indicator. It is currently trading below neckline support just below the 0.6600 handle. A bearish candlestick below today’s lows at 0.6570 may indicate that NZDUSD is on its way to support around 0.6400 where it bottomed on November 25.
On the other hand, a rally above 0.6665 where NZDUSD peaked on January 16, would invalidate the bearish chart pattern. It indicates that there could still be buyers in the market to push price up to its December 31 high at 0.6750.