Japanese Yen: USD/JPY (JPY=X) rises, dollar flat as Trump signs the Hong Kong bill
On Thursday, increasing worries about the Sino-US tensions caused the safe-haven prices to rise, while the dollar stayed near flat.
The USD/JPY pair dropped 0.1% to 109.45 by 05:20 GMT.
The U.S. President Trump signed into law two bills that support protesters in Hong Kong. The move could potentially complicate ongoing trade talks in China.
China, responding to the move, its foreign ministry said they firmly opposed the law and threatened to take firm retaliatory measures. They said any attempt to interfere with Hong Kong was “doomed to fail”
Chinese and Hong Kong Stock fall
Today, the Chinese and Hong Kong stocks dropped following the news. The yen traded modestly higher.
Meanwhile, consumer data showed that Japan’s retail sales plunged 14.4% in October from the previous month. It was more than the expected decline of 10.4%.
“Traders are buying the yen because of the news about Trump signing the Hong Kong bill,” said Yukio Ishizuki in a Reuters report.
Yukio is the foreign exchange strategist at Daiwa Securities.
Algorithmic trading might push the yen further up, but positive U.S. economic data, which has lifted sentiment, will limit the dollar’s losses.
The U.S. Dollar Index last traded at 98.248, changing little from yesterday’s close.
The Commerce Department reported that gross domestic product increased at a 2.1% annualized rate, compared to 1.9% in the first reading.
In a separate report, durable goods gained 0.6% after falling 1.4% in the prior month.
The AUD/USD pair slipped 0.1%, while the NZD/USD pair inched up 0.1%.
Yuan drops as Hong Kong tensions heighten risk aversion.
Trump move to sign into law the two bills pushed the offshore yuan lower on worries that this could worsen U.S. and China trade relations.
In the foreign market, the yuan fell 0.18% to 7.0269 per dollar. In the onshore market, the yuan remained at 7.0280 versus the USD.
The Hong Kong law requires the State Department to certify, at least annually, that it retains enough autonomy to justify favorable U.S. trading terms. The terms have helped Hong Kong maintains its position as a global financial hub.
The law also threatens sanctions for human rights violations in Hong Kong, which has been rocked by months of civil unrest in response to what protesters say is an erosion of freedoms since reverting to Chinese rule in 1997.
Beijing has denied any undue influence and has blamed foreign governments for meddling in Hong Kong’s affairs.
Many see the U.S. legislation as symbolic, but it has the potential, if implemented, to further rock relations between the United States and China.
Washington’s criticism also comes as U.S. and Chinese negotiators are trying to reach an agreement to de-escalate a trade war, which would remove a huge headwind from the global economic outlook.
The United States and China have imposed tariffs on each other’s goods in a prolonged dispute over Chinese trade practices that the U.S. government says is unfair.
Gold and Swiss franc also rose on Thursday as investors sought other safe harbors amid a potential increase in geopolitical risk.
Investor uncertainty benefited the Swiss franc, which pulled back from a two-month low to trade at 0.9990 against the greenback.
Gold, another safe-haven bought in times of uncertainty, rose 0.16% to $1,456.66 per ounce.
The Aussie dropped to a six-week low of $0.6764. It’s often traded as a proxy for global commodity demand.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 110.45.
The projected lower bound is: 108.61.
The projected closing price is: 109.53.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.
A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend (which appears to be the case with FOREX JPY=) this pattern implies an end to the rally as the bulls appear to have exhausted themselves.
During a downtrend the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 90.8555. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 13 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 63.96. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 77 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 162.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 13 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX JPY= closed down -0.050 at 109.500. Volume was 26% below average (neutral) and Bollinger Bands were 41% narrower than normal.
Open High Low Close Volume___
109.530 109.570 109.320 109.500 67,558
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 108.88 108.37 108.92
Volatility: 3 5 7
Volume: 87,326 88,563 90,145
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX JPY= is currently 0.5% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into JPY= (mildly bullish). Our trend forecasting oscillators are currently bullish on JPY= and have had this outlook for the last 1 periods.
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