Asia Pacific Market Open Talking Points
- The US Dollar depreciated on Friday with an improvement in sentiment
- US-China seem to be inching closer towards a trade deal, S&P 500 rose
- APAC equities may follow Wall Street higher, Nikkei 225 eyes resistance
Check out our 1Q forecasts for currencies like the US Dollar in the DailyFX Trading Guides page
The US Dollar (DXY Index) generally weakened across the board on Friday amidst an improvement in sentiment. Although, losses were trimmed towards the end of the session. Both the S&P 500 and Euro Stoxx 50 closed about 0.6% and 0.3% to the upside. The cause of market optimism seemed to stem from welcoming news on the US-China trade war front.
After meeting with China’s Vice Premier Liu He, US President Donald Trump announced that there is a “good chance” that a trade deal will be made. It looks as though the deadline before the US imposes additional tariffs on China (March 1) has been extended. What is interesting is that shortly after the announcement, the US Dollar pared losses looking at the chart below.
Initial Market Reaction to US-China Trade Update
Chart created in TradingView
At the time of this writing, S&P 500 futures pared their losses (seen above) and closed higher. But, there was also a rebound in front-end US government bond yields as USD trimmed its losses. It seems that an improving external environment bodes well for hawkish Fed monetary policy expectations, opening the door to gains in the Greenback. By the end of the day, the pro-risk Australian and New Zealand Dollar were generally higher.
As we begin the new week, economic event risk during Monday’s Asia Pacific trading session I notably lacking. This places the focus on risk trends. As such, we may see APAC equities echoing the gains seen on Wall Street. Despite bearish technical warning signs, the ASX 200 continues to make upside progress amidst increasing RBA rate cut bets.
Join Analyst David Cottle later today as he will be going over the major drivers for Asia Pacific markets this week, focusing on regional currencies such as the Japanese Yen
Nikkei 225 Technical Analysis
Japan’s Nikkei 225 continues to make upside progress after climbing above the falling resistance line from October. If market mood continues improving, we may see the index track closer the near-term resistance at 21851.30. Meanwhile, support appears to be at 21035.90.
Nikkei 225 Daily Chart
Chart Created in TradingView
US Trading Session Economic Events
Asia Pacific Trading Session Economic Events
** All times listed in GMT. See the full economic calendar here
FX Trading Resources
- See how equities are viewed by the trading community at the DailyFX Sentiment Page
- Join a free Q&A webinar and have your trading questions answered
- See our free guide to learn what are the long-term forces driving US Dollar prices
- See our study on the history of trade wars to learn how it might influence financial markets!
--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
