Dow Jones, NIKKEI 225, ASX 200 Index Outlook:

  • The Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.20%, +0.51% and +0.94%, respectively.
  • Powell’s patience with interest rate hikes restores investor confidence
  • Asia Pacific markets are in a slightly higher trading position. Markit US manufacturing PMI figures are getting attention.

Fed, USD, Crude Oil, PMI, Asia Pacific Weekly Forecast:

The Dow Jones Industrial Average rebounded for the second day in a row. Fed Chairman Jerome PowellHe reiterated his dovish assessment of monetary policy to allay fears of tapering. He said that inflationary pressurestemporary“and the Fed”patient“Awaiting a rise in borrowing costs at a congressional hearing on Tuesday. US stocks rebounded for the second day in a row after the St. Louis Fed President’s hawkish bias. James Bullard It facilitated a sharp sell-off on Friday.

recent market volatility It reflects investor anxiety about the Fed’s tightening measures as the pace of economic recovery accelerates and inflation numbers beat expectations. This Friday Key US PCE figures Traders will be watching closely for any clues about inflation and the impact on the Fed’s policy guidance.

Meanwhile, overnight demand from the Fed ON RRP facility It reached an all-time high of $791.6 billion on June 22.nd (chart below), reflects the liquidity expansion of financial institutions. This suggests that the market may have enough liquidity to gradually reduce the size of the Fed’s monthly asset purchases. A reverse repo occurs when the central bank sells securities and raises cash in the market to provide stability for the flow of loans. It usually happens when too much liquidity Demand for (cash) and interest-bearing securities increases.

Dow Jones Potential Nikkei 225 Potential As Tapering Fear Relieves

Source: Bloomberg, DailyFX

that much US Dollar Index It retreated to 91.75 over two days, easing pressure on commodities and emerging market assets. gold price It stabilized at around $1,770, but the overall trend could tilt downwards. crude oil The price is close to $72.9, the highest in two and a half years. OPEC+ It is known that the company is preparing for an increase in production from August. This decision could be supported by strong demand forecasts, strong oil prices and the recent futile nuclear negotiations between Iran and the world powers.

Looking ahead, BoJ Minutes together with today’s economic indicators. Markit US Manufacturing PMI readings. Economists expect the PMI to retreat slightly from May levels (chart below), but US manufacturing activity is expected to remain firm in expansion areas. A higher-than-expected figure could strengthen the US dollar, while a bearish one could do the opposite. Learn more at DailyFX Economic Calendar.

Markit US Manufacturing PMI – Forecast

Dow Jones Potential Nikkei 225 Potential As Tapering Fear Relieves

Source: Bloomberg, DailyFX

Asia Pacific market Placed for a mixed open today. Futures from Japan, Mainland China, Hong Kong, South Korea, Taiwan, Malaysia and India are green, while those from Australia and Singapore are red.

Japan Nikkei 225 Index We look set to extend Tuesday’s 3% rally as sentiment improves. Japan lifted the state of emergency for the Tokyo and Osaka areas this week. Eased Covid-related restrictions could pave the way for the index to target higher levels while keeping an eye on the 100-day SMA line.

Looking back at Tuesday’s close, five of nine Dow Jones sectors closed higher and 43.3% of index constituents closed green. Consumer discretionary (+1.27%) and materials (+0.62%) outperformed, while industrials (-0.25%) and telecom services (-0.21%) lagged behind.

Dow Jones Sector Performance 2021-06-22

Dow Jones Potential Nikkei 225 Potential As Tapering Fear Relieves

Source: Bloomberg, DailyFX

Dow Jones Indices Technical Analysis

The Dow Jones Indices are attempting a return to the “upside channel” after a brief break below.

Immediate support can be found at the 161.8% Fibonacci extension of 33,320 while key resistance is found at the 200% Fibonacci extension of 34,920. A bearish MACD divergence suggests that the price may be vulnerable to a technical correction as the bullish momentum dissipates.

Dow Jones index everyday chart

Dow Jones Potential Nikkei 225 Potential As Tapering Fear Relieves

Nikkei 225 Index Technical Analysis:

The Nikkei 225 index is attempting to break the “descending channel” upper bound for the second time. A successful attempt will strengthen short-term buying pressure and open the door for further profits while keeping an eye on the 100-day SMA line. The next resistance level can be found at 30,200, the 127.2% Fibonacci extension.

Nikkei 225 Index everyday chart

Dow Jones Potential Nikkei 225 Potential As Tapering Fear Relieves

ASX 200 Index Technical Analysis:

The ASX 200 is challenging the key resistance level of 7,340, a break that could push further towards the 200% Fibonacci extension of 7,500. The overall trend maintains a bullish bias as prices form successive higher highs and higher lows. However, the MACD indicator formed a bearish crossover, suggesting that the upside momentum could weaken.

ASX 200 Index – Daily chart

Dow Jones Potential Nikkei 225 Potential As Tapering Fear Relieves

— Written by Margaret Yang, Strategist at DailyFX.com.

To contact Margaret, use the comments section below or @margaretyjy on twitter

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