Daily analysis

Novox 2.18 Reference of Fx market


Asia-Pacific markets are poised for a cautious start on Thursday following an uninspiring session from Wall Street. The Dow Jones index edged up 0.29%, whereas the S&P 500 and Nasdaq Composite closed -0.03% and -0.58% lower respectively. A much stronger-than-expected US retail sales figure boosted consumer discretionary (+0.99%) and communication services (+1.22%) sectors, while industrials (-0.41%) and information technology (-0.39%) retreated.

The January FOMC meeting minutes appeared to be dovish-biased, as the policymakers highlighted that “economic conditions were currently far from the Committee’s longer-run goals”. This suggests that the current accommodative policy is likely to stay for an extended period of time until the job market returns to full employment and inflation stays above the Fed’s 2% target.

The US Dollar (DXY) index extended gains to 90.92, while the 10-Year Treasury yield retreated to 1.27% from a 12-month high of 1.33%. Overnight data showed that core inflation rates in the UK and Canada were picking up at a faster-than-expected pace. The US Producer Price Index (PPI)surprisingly hit 1.3% MoM in January, far above the baseline forecast of 0.3% and the highest since 2009. It suggests that prices for commodities sold for personal consumption, capital investment, government and export at the factory gate are picking up at a much quicker pace.

Mainland Chinese markets resumed trading from a long holiday break, and are likely to catch-up with the rest of the regional markets higher. Hong Kong’s Hang Seng Index surged over 3% this week and broke above 31,000 for the first time since June 2018, buoyed by recovery optimism and an accommodative monetary environment.

Australia’s ASX 200 index opened marginally higher, led by healthcare (+2.19%), information technology (+0.82%) and financials (+0.18%) sectors, while real estate (-1.14%), energy (-0.86%) were lagging. Japan’s Nikkei 225 index broke above 30,000 mark for the first time in more than three decades this week, marking a month-to-date gain of 10.14%.

Looking back to Wednesday’s close, 6 out of 9 Dow Jones sectors ended higher, with 56.7% of the index’s constituents closing in the green. Energy (+3.00%), communication services (+1.22%) and consumer discretionary (+0.99%) were among the best performers, whereas industrials (-0.41%) and information technology (-0.39%) were trailing.

Dow Jones Sector Performance 18-02-2021

Dow Jones Index Technical Analysis

The Dow Jones index resumed its upward trajectory after returning to the “Ascending Channel”. Prices continued to move higher within the upper Bollinger Band, pointing to further upside potential with an eye on 31,910 – the 76.4% Fibonacci extension level. The upper Bollinger Band may serve as a dynamic resistance level, whereas the 20-Day Simple Moving Average (SMA) line may be viewed as an immediate support.

Dow Jones Index – Daily Chart

Nikkei 225 Index Technical Analysis:

The Nikkei 225 index is riding a strong uptrend higher, facing an immediate resistance level at 30,455 – the 161.8% Fibonacci extension. A successful breakout above this level may open the door for further upside potential towards the next key resistance at 31,640 – the 200% Fibonacci extensions, whereas a pullback from here may lead to a test of 29,380 for support. The overall trend remains bullish-biased, as suggested by the upward-sloped moving average lines.

Nikkei 225 Index – Daily Chart

ASX 200 Index Technical Analysis:

The ASX 200 index is trending higher within the “Ascending Channel” as highlighted below. The overall trend remains bullish-biased as suggested by upward-sloped Moving Averages. An immediate resistance level can be found at 6,935 (the 200% Fibonacci extension), and an immediate support level can be found at 6,780 (20-Day SMA).

ASX 200 Index – Daily Chart