USD/JPY Targets 200-Moving Average, Hong Kong Security Law

Summary – Coronavirus Pandemic, US-China trade war, Hong Kong Security war, USD/JPY, S&P 500

  • USD/JPY targets the 200-MA as it considers extending the 5-day rally
  • S&P consolidates as the Hong Kong Security Law increases tensions between China and the United States.

Asia – Pacific Summary

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The extensive risk on the tilt was experienced in the Asia –Pacific trade as the existing Chinese PMI data pushed the highly sensitive Aussie dollar against its USD counterpart. The future of the S&P 500 remains unchanged despite real estate sales figures being better than expected.

The Japanese yen and the USD shrank before they pegged back the lost ground, as the closure bell rang for this AUD. On the other hand, Gold still held steady at about $1,770.While results in the united states 5 year period treasuries drifted much lower to record a new low of approximately 0.271%. As the Australian federal reserve wants to replicate the Australian reserve bank assumption on the Yield Curve Control.

Going forward, a major focus will be on the testimony of Steven Mnuchin who is the treasury secretary. And Jerome Powell’s, the chairman of the Federal Reserve of the House Financial Service Committee.

Coronavirus Pandemic News Impact

According to what the CEO of the World Health Organization (WHO) stated, the “worst has not yet come,” which will continue draining positivity from the financial markets as worldwide cases of COVID 19 blast over 10 million, with more than 500,000 fatalities.

The worsening situation in the US continues to have an impact on different states. As Houston, the 2nd most populated neighborhoods in Texas reported that 95% of their ICU beds were already occupied. Also, Arizona restated the initial restrictions on theatres, gyms, and bars.

The perception that the coronavirus pandemic might only be seasonal seems to be a hoax. As coronavirus cases continue soaring even during summer. Proposing that the complete lifting of the restrictions might not happen until an effective vaccine is found.

In this regard, global asset prices might come under overwhelming pressure and investors start questioning whether the recovery will extend beyond the basics.

Hong Kong Security Law Raises USA-China Tensions

Tensions between the US and China may have been escalated by the NPCSC (National People’s Congress Standing Committee) after they chose to approve the Hong Kong National Security law, which is highly controversial before the anniversary that marks the countries return to Chinas jurisdiction.

S&P 500 DAILY CHART

USDJPY-Eyes-200

The USD/JPY attempts to regain the lost ground after it initially collapsed by 3% from 109.85.

The RSI initial development last week indicated that prices would continue on the download spiral. But the sharp reversal before the oversold readings can see the USD/JPY work their way back to the initial 200-day moving average.

That said, the momentum indicator seems to have diverged from the price and the technical oscillator. Highlighting the impending level of USD/JPY bearishness. This might result in the exchange rate, reversing on February down spiral. As it has been the case in few previous occasions.

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