Market Brief: Nikkei 225, Hang Seng Index, AUD, & NZD Down as Risk Appetite Fizzles

Summary:
• The Nikkei 225, Hang Seng Index, and risk currencies trade lower in today's Asian session in the absence of economic data and as risk appetite fizzles.

The Nikkei 225 suffered a 131.7-point or 0.55% loss when it closed today’s session at 23,394.4. As for the Hang Seng Index, it is slightly lower at 27,807.6, down −36.1 points or 0.13%. NZDUSD, on the other hand, is down 3-pips from today’s open price as it trades at 0.6567. It closed with a 25-pip loss in yesterday’s trading at 0.6570. Meanwhile, AUDUSD is virtually unchanged at 0.6850.

Trade Deal Euphoria Dying Down

It would seem that the excitement over the US-China phase one deal has begun to fizzle. On Friday, the US announced that it would roll back existing tariffs. It also cancelled additional ones which were supposed to be implemented last Sunday, December 15. China, meanwhile, has agreed to buy up to 200 billion USD of US energy, manufactured, and agricultural goods until 2021.

Equities markets all over the world have enjoyed rallies thanks to this news. However, without new updates, it would seem that this development has already been fully digested by investors.

Third-tier Data from Asia-Pacific Released Today

In today’s Asian session, we saw a few reports released. The first one was New Zealand’s current account report for the third quarter of 2019. The report showed an account deficit of 6.35 billion NZD which missed forecasts at 6.32 billion NZD.

Meanwhile, Melbourne Institute’s leading index for December printed slightly higher compared to its November reading. It came in at -0.1%, an improvement from -0.2%. This suggests that Australian businesses have grown less pessimistic about economic conditions for the last month.

In Asia, Japan’s trade balance came in as expected. It printed a 600 billion JPY deficit for November.

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NZDUSD Outlook

On the hourly time frame, we can see that NZDUSD is trending lower. This is evidenced by the falling trend line that you get when connecting the lower highs of December 13, December 16, ad December 17. Any upside movement on NZDUSD will likely be limited by a confluence of resistance around 0.6570 to 0.6585. For one, the 38.2% Fib level (drawing the Fibonacci retracement tool from yesterday’s high to today’s low) align nicely with the 100 SMA. Meanwhile, the area between the 50% and 61.8% Fib levels coincides with the falling trend line.

A break below the Asian session lows around 0.6550 may mean that NZDUSD is on its way lower to support at its December 11 lows at 0.6522.