Market Brief: Cautious Optimism Fuel Risk Appetite

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Written By: Angeline Feliciano
Reviewed By: Alejandro Zambrano
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Investor sentiment seem to have improved enough to push equities and higher-yielding currencies higher to start this week’s trading. The Hang Seng Index is up over 200 points from Friday at 26,545.60 while the Nikkei is up close to 0.30% at 23,269.70. Meanwhile, AUDUSD continues to hold most of its gains from Friday, finding support at the 0.6800 psychological handle, as with NZDUSD which is trading around 0.6400.

Market participants did not seem worried despite reports from Hong Kong suggest that tensions continue to build up. On Friday, protestors blocked roads around Central which is the city’s financial center. The government also revised down its growth forecast for 2019 amid the political unrest. Compared to a year ago, Hong Kong GDP is eyed to show a 1.3% contraction.

There seems to be a sense of cautious optimism among market participants. It was reported that the US and China had “constructive talks” over tariff negotiations on Friday. This news follows after White House Chief Economic Adviser Larry Kudlow announced that they were “getting close” to a deal earlier last week.

The announcement of a merger deal may have also boosted risk appetite in Asian equities today. Z holdings (previously known as Yahoo Japan) announced a merger plan with Line Corp which operates a messaging app. It is said that deal would create a 30 billion-dollar tech giant.

AUDJPY Outlook

The sell-off on AUDJPY seems to have stalled on Friday as with risk appetite picked up. On the daily time frame, the currency pair found support at the 100 SMA and on the rising trend line from the lows of August 26, October 2, and October 10. Using the Fibonacci retracement tool and drawing from the low of October 2 to the high of November 7, AUDJPY also found support at the 50% Fib level.

If risk appetite continues to dominate market sentiment, we could see the currency pair rally to its monthly highs at 75.64.On the other hand, if support at the trend line breaks, AUDJPY could drop to its October lows at 71.70.

Written By: Angeline Feliciano
Reviewed By: Alejandro Zambrano

Angeline Feliciano has been trading Forex for over ten years. She has invaluable experience working in FX education companies like BabyPips.com and Learn to Trade as a trader, currency analyst, trading coach, and presenter. Aside from these roles, she has also created intensive educational content on fundamental analysis which is heavily sought after by retail traders. She has taught hundreds of people how to trade the FX market in the Philippines and in Australia. When she is not trading, you can find her in the gym lifting weights.

Published by
Written By: Angeline Feliciano
Reviewed By: Alejandro Zambrano