Asian Stocks Still Concerned with Global Slowdown Acceleration; DXY Trades Slightly Higher, but Continues Rising Wedge Pattern

Monday afternoon here in the Asia Pacific and equity markets are mostly mixed on concerns that the global slowdown in growth is accelerating. Chinese equities are up between one and two percent for the Shanghai Composite and Shenzhen Component (399001) respectively during intra-day trading in spite of this. The Hang Seng (HSI), Nikkei 225 (NI225), and TAIEX are also up, but to varying degrees while Australian (STW), Malaysian (FBMKLCI), and New Zealand (NZ50G) stocks are down. In spite of the mixed results on the day, most indexes are up since December when high volatility rocked US equity markets and in turn some global indices:

In the background is the US China trade war negotiations which are still ongoing, the Chinese National People’s Congress which will give us one more week of headlines, and Brexit negotiations which are by many standards not productive. Not much severely important event risk this week in the form of data releases, but still we have the Bank of Japan’s rate decision on Friday. However, the BoJ is largely expected to keep rates right where they are. Global equities saw the worst performance last week since strong volatility in late December of 2018.

DXY Trades Higher on Weaker Euro, Weaker ASEAN Currencies

Meanwhile, the DXY dollar trade weighted index traded slightly higher, but has been mostly trending upwards largely on euro weakness. DXY has also benefited from stronger trading against ASEAN emerging market currencies as well:

Some speculate that if there is a trade deal between the US and China DXY will weaken significantly on potential expectations that global growth will increase. However, the trend of the 2019 global growth slowdown has yet to moderate and if anything this trend is only increasing its momentum. DXY though is clearly fixed in an rising wedge, a bearish reversal pattern, which is moving towards a break. The question remains though which way it will break and, more importantly, if there is follow through with underlying fundamentals to drive the technicals.