Kospi Anxiety With Deflation Threat South Korea
Kospi down after South Korea’s inflation data released this morning showed that deflation threat faced by the country ginseng. Inflation (consumer price index) recorded a decline of 0.2% monthly in November after in October also decreased 0.3%. Annual inflation slowed to just 1.0% rise incised in November; lower than the previous publication which rose 1.2%. This means that inflation is getting away from the range of the Bank of Korea’s inflation target of 2.5% – 3.5% and confirms the existence of a threat of deflation. Kospi futures fell 0.16% and is now trading at 250.95
Investors also look vigilant after a series of manufacturing data from various countries yesterday confirmed the threat of global economic slowdown. China’s manufacturing sector activity and the euro-zone each fell to 50.3 and 50.1 in November. Although better than expected, but the US manufacturing ISM index decreased from 58.7 to 59.0 into November.
Technically, the index on the trading session today, Tuesday (02/11) likely to weaken, test negative trends, the impact of Wall Street. At the M15 chart bearish engulfing formation provides opportunities for the index to move downside. However, the volume tends to rise, early indications bullish index. In addition, RSI, the M15 chart, are oversold, signaling upside.
It is estimated, the index test the first support level that is 245.50 and 240.10. If it fails at 250.10, then the next index is expected to tend to retest the resistance level of 253.40 and continued until the possibilities are in the 256.10 area.
Fluctuating USDJPY Post Rating Moody’s Downgrade
Pairing USDJPY moves like a roller coaster after credit rating agency Moody’s cut Japan’s sovereign credit rating becomes A1 of the previous arguments AA3 with a debt reduction program uncertainty will impact on the Japanese fiscal policy to sustain economic growth.
In reporting cuts credit rating, Moody’s view that the policy of inflation targeting Japan has the potential to put pressure on JGB yields while the pro-growth policies actually provide risk on debt consolidation so that adds to the uncertainty of the implementation of the necessary structural reforms and the economy is known as the third arrow Abenomics.
However some market participants still be optimistic in the short-term outlook for Japan, especially with the fall of energy prices and the weakening of the yen should be a stimulus and sustain the pace of Japanese exports.
As a result USDJPY moving pairing wild rose to 119.15 shortly after its credit rating cut, but then fell sharply to 118.07 and finally stabilized at around 118.45. USDJPY weakening of the level 119 may reflect investors’ worries over slowing downgrade the rating of the BoJ’s massive QE program. However along with 90% ownership by JGB bonds in the Japanese domestic market, the warning by Moody’s likely only a minimal impact.
Technically, today’s trading session on Tuesday (02/11), the dollar yen pair likely to move in a positive trend.
A stronger yen is mainly expected to immediately re-examine the minimum resistance at 123.10 and 128.50 maximum. Meanwhile, if the Yen was able to break and stays below 118.43, the other alternative scenario that Yen likely to test support in 105.00 and 110.50 area.
Gold Streaking, Closed Above $ 1200
Gold surged on Monday, recorded its biggest daily rise since September 2013, and closed above $ 1,200 for the first time since the end of October. The increase in gold triggered an increase in safe-haven assets as a result of Japan’s credit rating downgrade and the weakening dollar. Other factors that support the strengthening of the gold is the easing of import restrictions by the government of India, and bargain hunting and short covering investors.
Moody’s lowered the credit rating of Aa3 Japan into A1, the decline was the first of the major rating agencies since 2012. The last time Moody’s lowered the credit rating of Japan in 2011.
Gold in early Asian trading session on Monday had declined after the results of the Swiss referendum rejects petition to the Swiss National Bank to raise the portion of gold as reserves. The referendum results showed 77% of voters rejected the SNB to increase the portion of gold to 20% from the current 8%.
Gold on Monday’s trading to close at $ 1,212.05 per ounce tory, with daily lows $ 1,142.65, and the highest $ 1,221.13.
Technically, gold in today’s trading session on Tuesday (02/11) potentially bearish, tested negative trend back, but prone to reversal. RSI indicator tends to re-test support channel and towards the oversold area, but Bollinger Bands that began to widen, thus giving impetus to the gold to the upside.
It is estimated that the gold price immediately prior to test support in the area of at least 1200.33 and re-test the maximum level of 1195.73. However, if the price of gold is able to break and hold above 1206.80, the estimated price of gold could potentially test the 1208.40 and 1210.72 resistance.
