Shanghai Composite submissive to bears, whilst BoJ likely to act again

The mounting concerns about the economic deceleration in China combined with renewed debates over the accuracy of its Q3 GDP release of 6.9% have resulted in the Shanghai Composite Index concluding Wednesday’s trading session -3.06% lower. Sentiment remains bearish on the China markets and more downside pressure may be expected within the Shanghai Composite as expectations fade that the Chinese government may move forward with a big stimulus package similar to the 4 trillion yuan program launched in 2009.

A heavy blow was dealt to the Japanese economy as its exports for September declined sharply, following a drop in shipments to China. September’s exports were released at +0.6% compared to the forecasted +3.4%, and the drop in external demand has reinstated fears about another reduction in Japan’s Q3 GDP. Japan continues to be exposed to downward pressures as a decline in commodity prices has punished its 2% inflation target for 2016. With the fears of the world’s third largest economy on the brink of a recession, the BoJ may likely expand stimulus measures in the next meeting on the 30th of October.

Focusing on the Eurozone, the much anticipated ECB press conference will be held on Thursday in which Mario Draghi may be expected to reiterate his dovish mantra on the health of the Euro. The Eurozone continues to be exposed to an extended period of pressure from the decline in commodity prices which has hindered its 2% medium-term inflation target. The stacks are against any Euro bulls and after September’s deflationary CPI reading of -0.1%, the ECB has been provided a compelling case to come forward to provide additional stimulus measures in the near future.

Following the inspiration instilled into the Sterling bulls as a result of a Hawkish BoE McCafferty, the spotlight will be redirected to BoE Carney later today. Today’s speech may cover the health of the UK economy in which market participants will be observing the tone and any additional clues on when the BoE may likely hike rates. As of now, the potential decline in economic momentum in the UK mixed with the fact that the CPI release in October ventured into deflationary territory has provided a strong reason as to why the BoE may hold of a rate hike until 2016.

AUDJPY
The AUDJPY is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. A solid breach above 87.50 may open a path to the next relevant resistance at 89.50. A breakdown below the 86.00 support suggests bullish weakness.

NZDJPY
The NZDJPY is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. As long as prices can keep above the 79.00 level, there may be an incline to the next relevant resistance at 83.00.

CHFJPY
The CHFJPY is currently bullish on the daily timeframe. A breakout above the 126.00 resistance may open a path to the next relevant resistance at 129.00. The trend defining level for this bullish outlook to remain valid is at 124.50.

EURTRY
The EURTRY is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A breakdown below the 3.2550 support may open a path to the next relevant support at 3.1150.