by Chris Becker
The manic Monday has turned into a turgid Tuesday with Asian markets winding back the confidence trades as the Trump administration continues to spook markets with its strong and sometimes unpredictable approach to a new form of US isolationism. The usual safe haven trades – Gold and Yen – have benefited with USD selling off mildly as US assets are reweighted.
Chinese stock markets, including the Shanghai Composite and Hang Seng Index are closed until Friday due to the Chinese New Year.
Japanese stocks have sold strongly mainly due to the rising Yen on the safe haven trade as the BOJ meeting today was a wash with no change to monetary policy, only inflation expectations changing slightly (i.e less thereof). The Nikkei fell over 1.2% to close just above 19100 points. The hourly chart for USDJPY shows a possible temporary bottom forming at the 113 handle but I would surmise that European traders will bid the Yen again due to ongoing turmoil so we could see a break below and through to terminal support at 112.50:
S&P Futures are being dumped with traders doubling down on gold instead as traders continue to weigh up the chaos that has so far been the Trump administration. The four hourly chart shows a failure to get back above the late rally last night as it goes back to the session low at 2268 points – its going to be a fun night!
The ASX200 fell 0.7% today with losses across financials and the major commodity players even as Fortescue puts in a stellar iron ore production number for the quarter. Going down to 5600 points, the major bourse is on track for a correction down to 5200 points if overseas markets don’t provide a positive lead soon (read: German DAX for the positive correlation with Aussie banks, and hence the whole market).
The Aussie dollar continues to do well in the face of heightened risk, slowly melting higher after a solid Monday session. Against USD, the previous daily high at 75.50 is being pipped firmly here before the London session with the hourly and four hourly chart looking firm here to reach 76 cents:
The data calendar in Europe follows up the German CPI print with German unemployment – also known as the only two economic datapoints the ECB cares about – while in the US its house prices and the Chicago PMI.