The Japanese Stock Market Index Nikkei dropped -0.47% alone in the Asian session today. The bearish momentum in Japanese stock markets is initiated over increased demand for haven assets such as gold and yen.
Forex Trading Signal – Idea
The Idea is to have a buy position above $20060 with a stop loss below $20040, in order to target $20150.
Key Drivers – Nikkei
Firstly, the dips in the US equities drag the Japanese stock index due to the strong correlation between them.
Secondly, the major gains in the yellow metal, which is the top most preferred investment during the times of uncertainty, has shifted investors' attention and investments from the equities to the bullion.
Thirdly, and most importantly, the US dollar slipped to 8-month lows against peer currencies due to a delay in the highly-awaited US health care vote which is now weighing heavily on the Buck. The weaker dollar increases demand for the Japanese Yen. A stronger Yen always hurts the Nikkei, since the strong yen has never been the plan of the BOJ (Bank of Japan). Japan is an export-oriented economy and favors a weaker Japanese Yen. But today, the gains in the Yen demotivated investors to invest in stocks over lower profit concerns.
Nowadays, the market is choppy, so it's highly recommended to follow strict risk management and move your stop loss into positive territory in order to avoid reversals.
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