Asian Indices Higher on Renewed Hopes about US-China Trade Relations

Nikolas Papas

Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).

Asian Indices Higher on Renewed Hopes about US-China Trade Relations

January 21, 2019

China revealed a bunch of economic data. On an annual basis, fourth-quarter GDP was 6.4%, and the consensus was 6.4%. Analysts were expecting retail sales to be 8.2%, and they came in at 8.2%. Industrial output was 5.7%, while traders were anticipating 5.3%. Fixed asset investment was 5.9%, and economists were expecting 6%. China’s economy grew by 6.6% in 2018, its slowest pace since 1990. Brexit will remain in focus this week. Theresa May will outline her plan B later today, and reports suggest that it won’t be too different from the agreement that was overwhelmingly voted against last week, so hopes aren’t high.

The encouraging start to 2019 is continuing for Asian equities with Japan’s Nikkei225 index 0.26% higher, while the Shanghai Composite Index added 0.7%.  The Aussie ASX 200 was 0.2 higher, hitting two-month highs and making it five straight days of gains. The index has jumped by more than 4% in January so far.

European equities on Monday started the session in red with Germany DAX 0.35% lower at 11,166, CAC40 is giving up 0.20% at 4,866, and London FTSE is 0.16% lower.

On the Lookout: Next on traders’ radar is UK Prime Minister Theresa May’s revised plan for exiting the European Union, with her original proposal left in tatters after being roundly rejected by MPs last week. Bank of Japan will conclude its two-day monetary policy meeting on Wednesday and is widely anticipated to keep its stimulus program unchanged. European Central Bank also has the first rate-policy meets for the year on Thursday.

The New York Stock Exchange will be closed today as the US celebrates Martin Luther King Jr Day.   

Trading Perspective: EURUSD started the week with small gains (+0.16%) after last week decline to 1.1353. Traders are waiting for Mario Draghi’s comments on Thursday to be more dovish, but I don’t expect any significant changes at the ECB meeting. The pair is holding the 50-day moving average today at 1.1380, giving buyers a breath and an upside target to Friday’s high at 1.1412. A failure at the 50-day moving average will drive prices down to 1.1353 Friday’s close, and then to 1.13 round figure. Open interest in EUR futures markets dropped around 2.3K contracts on Friday from Thursday’s final 526,080 contracts, according to preliminary data from CME Group. The volume, as well, decreased by more than 7.5K contracts and prolonged the choppy performance.

china
EURUSD Daily Chart

USDJPY is trading down 0.13% to 109.64 today but keeps the positive short term positive as the pair is trading above the 200-hour moving average. The 50-hour moving average at 109.33 provides solid support, while further support can be found at 109 level. On the flipside, 110 figure is the first resistance for the pair, and further supply will be met at the 200-day moving average around 111.16.

GBPUSD There are no material economic stats scheduled for release through the day, leaving the Sterling in the hands of Theresa May’s, Brexit Plan B, or lack of and chatter from Parliament. Today the pair is down 0.15% at 1.2852; the outlook turns negative after the pair rejected at 1.30 last week. The first short-term support will be found at the 200 hours moving average in 1.2842 area while a break below can drive prices down to 50day moving average at 1.2757. On the upside, the first resistance will be met at the 100-hour moving average at 1.2886. CME Group’s advanced data for GBP futures markets investors scaled back their open interest positions by around 1K contracts on Friday vs. Thursday’s final 214,787 contracts. In the same line, volume dropped by nearly 12.1K contracts.

GBPUSD Hourly Chart

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