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Asia Roundup: Kiwi steadies as RBNZ warns of growth risks, Aussie gains on stronger-than-expected Chinese trade balance, Asian shares advance – Thursday, November 8th, 2018

Market Roundup

  • U.S. to impose new duties on Chinese aluminum sheet products
     
  • Trump ousts Sessions, vows to fight Democrats if they launch probes
     
  • BOJ debated room for future tweaks to easy policy in October
     
  • UK house price indicator drops to six-year low – RICS
     
  • New Zealand central bank shifts to neutral tone, warns of growth risks
     
  • Australia launches $1.5 bln Pacific fund to counter China's influence
     
  • U.S., China should ensure G20 talks go well – senior Chinese diplomat
     
  • China Trade Balance USD, 34.01 bln, 35.00 bln f'cast, 31.69 bln prev
     
  • China Exports (y/y), 15.6%, 11.0% f’cast, 14.5% prev
     
  • China Imports (y/y), 21.4%, 14.0% f’cast, 14.3% prev
     
  • Japan Current Account NSA JPY, 1,821.6 bln, 1,722.6 bln, 1,838.4 bln prev
     
  • Japan Machinery Orders (y/y), -7.0%, 7.7% f'cast, 12.6% prev
     

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Trade Balance, EUR, SA, 18.0 bln f'cast, 18.3 bln prev

Key Events Ahead

  • (0915 ET/1415 GMT) Keynote speech by ECB Board Member Benoit Coeure at conference in Dublin
     
  • (1020 ET/1520 GMT) ECB President Mario Draghi speaks in Dublin
     
  • (1100 ET/1600 GMT) ECB's governing council member Ewald Nowotny speaks in Frankfurt
     
  • (1400 ET/1900 GMT) U.S. Federal Reserve's FOMC announces its decision on interest rates
     

FX Beat

DXY: The dollar index surged as the central bank's Federal Open Market Committee (FOMC) is due to release its latest policy decision after a two-day meeting. The greenback against a basket of currencies trades 0.05 percent up at 96.21, having touched a low of 95.68 on Wednesday, its lowest since October 22. FxWirePro's Hourly Dollar Strength Index stood at -92.48 (Slightly Bearish) by 0400 GMT.

EUR/USD: The euro consolidated within narrow ranges, as investors remained cautious over Italy's budget deficit and concerns over Europe's slowing economic growth. The European currency traded flat up at 1.1424, having touched a high of 1.1499 on Wednesday, its highest since October 22. FxWirePro's Hourly Euro Strength Index stood at 26.77 (Neutral) by 0400 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, EZ economic bulletin, and European Commission's economic growth forecasts, ahead of the U.S. unemployment benefit claims and Fed policy meeting outcome. Immediate resistance is located at 1.1529 (October 8 High), a break above targets 1.1550 (October 22 High). On the downside, support is seen at 1.1382 (10-DMA), a break below could drag it till 1.1302 (October 31 Low).

USD/JPY: The dollar rallied toward a 1-month peak, as investors turned their focus to the Federal Reserve's monetary tightening path. The Fed has increased interest rates three times this year as the U.S. economy strengthened and inflation picked up momentum. The central bank has signalled a rate rise in December, with two more hikes by mid-2019. The major was trading 0.2 percent down at 113.70, having hit a high of 113.81 on Wednesday, its highest since October 8. FxWirePro's Hourly Yen Strength Index stood at -143.01 (Highly Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims and Fed policy meeting outcome. Immediate resistance is located at 114.10 (October 5 High), a break above targets 114.55 (October 4 High). On the downside, support is seen at 113.07 (November 5 Low), a break below could take it lower 112.35 (October 22 Low).

GBP/USD: Sterling steadied near a 3-week peak on growing hope that Britain is close to securing a deal with the European Union less than five months before it is due to exit the bloc. The major traded flat at 1.3124, having hit a high of 1.3174 on Wednesday; it’s highest since October 17. FxWirePro's Hourly Sterling Strength Index stood at 81.43 (Slightly Bullish) 0400 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3181 (October 15 High), a break above could take it near 1.3257 (October 12 High). On the downside, support is seen at 1.3011 (October 19 Low), a break below targets 1.2936 (October 23 Low). Against the euro, the pound was trading 0.05 percent down at 87.05 pence, having hit a high of 87.00 earlier, it’s highest since May 30.

AUD/USD; The Australian dollar held gains near a 2-1/2 month peak after data showed China exports surged 15.6 percent from a year earlier in October, while imports expanded 21.4 percent, both beating expectations. The Aussie trades 0.05 percent up at 0.7273, having hit a high of 0.7299 on Wednesday; it’s highest since September 26. FxWirePro's Hourly Aussie Strength Index stood at 162.96 (Highly Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7236 (September 25 Low), a break below targets 0.7164 (October 13 Low). On the upside, resistance is located at 0.7300, a break above could take it near 0.7345.

NZD/USD: The New Zealand dollar extended gains for the fourth straight session, after the Reserve Bank of New Zealand kept the official cash rate at 1.75 percent, as widely expected, and signalled the need for rates to stay there until 2020. The Kiwi trades 0.05 percent up at 0.6784, having touched a high of 0.6814, its highest level since August 1. FxWirePro's Hourly Kiwi Strength Index was at 81.39 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6832 (July 31 High), a break above could take it near 0.6850 (July 26 High). On the downside, support is seen at 0.6720 (August 3 Low), a break below could drag it below 0.6687 (July 3 Low)

Equities Recap

Asian shares rallied to a 1-month peak, boosted by stronger-than-expected data from China, while the greenback bounced from 2-1/2-week lows ahead of the Federal Reserve's Federal Open Market Committee policy meeting outcome.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5 percent.

Tokyo's Nikkei gained 1.9 percent to 22,513.29 points, Australia's S&P/ASX 200 index advanced 0.5 percent to 5,928.20 points and South Korea's KOSPI surged 1.6 percent to 2,112.82 points.

Shanghai composite index rose 0.3 percent to 2,649.84 points, while CSI300 index traded 0.3 percent up at 3,230.62 points.

Hong Kong’s Hang Seng traded 0.8 percent higher at 26,325.99 points. Taiwan shares added 0.4 percent to 9,945.43 points.

Commodities Recap

Crude oil prices surged despite record U.S. crude output heightened concerns of a return of global oversupply. International benchmark Brent crude was trading 0.1 percent up at $72.04 per barrel by 0406 GMT, having hit a low of $71.21 on Tuesday, its lowest since August 16. U.S. West Texas Intermediate was trading 0.2 percent up at $61.70 a barrel, after falling as low as $61.23 on Wednesday, its lowest since Mar. 16.

Gold prices declined, extending losses for the fifth straight session, while the dollar surged and investors turned their attention to the Federal Reserve meeting for clues on future interest rate hikes. Spot gold was 0.2 percent down at $1,223.64 per ounce at 0410 GMT, having touched a low of $1,222.93 on Wednesday, its lowest since Nov. 1. U.S. gold futures were down 0.2 percent to $1,226.6 per ounce.

Treasuries Recap

The Australian government bonds slumped across the curve during Asian session as investors took the U.S. mid-term elections results positively, providing some relief to equity markets. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 4-1/2 basis points to 2.768 percent, the yield on the long-term 30-year bond also jumped 3 basis points to 3.286 percent and the yield on short-term 2-year up 3-1/2 basis points to 2.087 percent.

The New Zealand government bonds slipped, sending yields about 5 basis points higher at the long end of the curve.

The Canadian government bond prices were mixed across a slightly flatter yield curve. The 10-year rose 4 Canadian cents to yield 2.529 percent.


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