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The Stock Market Rollercoaster and USD/JPY

Aug 14 2019, 05:51 PM (+06) |

The stock market roller-coaster continues.  On Tuesday, August 13, 2019, the office of the United States Trade Representative announced the next steps on the proposed 10 percent tariff on imports from China. The additional tariff that was announced by Trump 2 weeks ago was to take effect on September 1st but after a “very good call with China” the date has been moved to December 15th, Trump Stated in an interview in Washington. He also stated that this delay is for the Christmas shopping season “just in case some of the tariffs would have an impact on US customers, which so far, they’ve had virtually none. The only impact has been that we’ve collected almost $60 billion from China, compliment of China.” The tariff delay, however, is not for all items.  Some of the products that the tariff is delayed on are, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing. You may view the 2 full lists of products that take an effect as of Sept. 1st and Dec. 15 on the USTR website

Apple is probably one of the biggest winners in the tariff delay. Apple shares rose by 4.2% which is nearly 58 of the 373 points contribution to the Dow Jones recovery. Amongst other biggest beneficiaries of the tariff delay are companies like Best Buy, Nike, Microsoft, Intel, Cisco, Caterpillar, and others. The S&P500 rose by 42.57 points and Nasdaq by 153 points – both completely recovering Monday’s losses. 

Japanese stocks also rose due to the tariff delay, with Japan’s chipmaking and Apple related companies getting the biggest break. Nikkei rose by 1% recovering Tuesday's sharp decline. 


The Dollar index (DXY is an index that measures the USD against a basket of other major currency pairs) also rose yesterday. 

For our technical analysis let’s review USD/JPY. USD gained about 1.2% against the Japanese yen, showing a nice recovery after the beginning of August’s dip due to the additional tariff announcement. 

There will be a lot of news releases today and for the rest of the week from the United States, please check yesterday’s article on the important releases from the US for this week. Japan will also release its Industrial Production figures tomorrow at 4:30 GMT. The gain in USD/JPY is also due to yesterday’s better than expected Core CPI figures from the United States.

Looking at the technical side of things for USD/JPY on the 4HTF, we see that the price has bounced from a strong area of support that is situated in the vicinity of 104.800 – 105. We see that MACD lines intersected when the day began on August 13th, the price is currently above the 9 and 20 EMA. A movement to the upside will have profit target areas at 106.676 (38.2% Fibo), followed by 107.176 (50% Fibo) and then 107.677 (61.8% Fibo). Short position traders need to keep a close eye on the level of support starting in the area of 105.050.

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