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Asia Roundup: Aussie slumps as Q3 GDP misses expectations, greenback rebounds amid U.S.-China trade war tensions, Asian shares plunge – Wednesday, December 5th, 2018

Market Roundup

  • China confident it can clinch U.S. trade pact as Trump demands “real deal”
     
  • British PM suffers setbacks as Brexit debate starts in parliament
     
  • Mueller says Flynn 'substantially' aided probe of possible links between Russia, Trump campaign
     
  • BOJ's Wakatabe warns Japan faces risk of falling back into deflation
     
  • Japan to ramp up public works spending to decade-high next year: Nikkei
     
  • BOJ on track to reduce superlong JGB purchases in Dec
     
  • Australia Q3 Real GDP (q/q) SA, 0.3%, 0.6% f’cast, 0.9% prev
     
  • Australia Q3 Real GDP (y/y) SA, 2.8%, 3.3% f’cast, 3.4% prev
     
  • China Nov Caixin Services PMI, 53.8, 50.8 prev
     
  • Japan Nov Services PMI, 52.3, 52.4 prev
     

Economic Data Ahead

  • (0345 ET/0845 GMT) Italy Nov Markit/IHS Services PMI, 49.2 f'cast, 49.2 prev
     
  • (0350 ET/0850 GMT) France Nov Markit Services PMI, 55.0 f'cast, 55.0 prev
     
  • (0355 ET/0855 GMT) Germany Nov Markit Services PMI, 53.3 f'cast, 53.3 prev
     
  • (0400 ET/0900 GMT) EZ Nov Markit Serv Final PMI, 53.1 f'cast, 53.1 prev
     
  • (0400 ET/0900 GMT) EZ Nov Markit Comp Final PMI, 52.4 f'cast, 52.4 prev
     
  • (0430 ET/0930 GMT) Great Britain Nov Markit/CIPS Services PMI, 52.5 f'cast, 52.2 prev
     
  • (0500 ET/1000 GMT) EZ Oct Retail Sales (y/y), 2.1% f'cast, 0.8% prev
     

Key Events Ahead

  • N/A ECB Governing Council meeting. No interest rate announcements scheduled
     
  • (0330 ET/0830 GMT) ECB President Mario Draghi speaks at an ECB event in Frankfurt
     
  • (0430 ET/0930 GMT) BoE publishes Record of the Financial Policy Committee meeting held on Nov. 20 2018 in London
     
  • (0430 ET/0930 GMT) Bank of Japan Governor Haruhiko Kuroda speaks at year-end gathering of economists in Tokyo
     
  • (1000 ET/1500 GMT) Bank of Canada key policy interest rate announcement in Ottawa
     
  • (1400 ET/1900 GMT) Federal Reserve issues the Beige Book of economic condition in Washington D.C.
     

FX Beat

DXY: The dollar index surged, extending the previous session rebound on growing concerns that Washington and Beijing will be able to clinch a substantive trade deal. The greenback against a basket of currencies trades 0.2 percent up at 97.11, having touched a low of 96.38 on Tuesday, its lowest since Nov 22. FxWirePro's Hourly Dollar Strength Index stood at 92.30 (Slightly Bullish) by 0500 GMT.

EUR/USD: The euro declined, extending previous session losses, after France's prime minister suspended planned increases to fuel taxes for at least six months in response to weeks of sometimes violent protests. The European currency traded 0.2 percent down at 1.1324, having touched a high of 1.1418 on Tuesday, its highest since Nov. 23. FxWirePro's Hourly Euro Strength Index stood at 8.86 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone Markit services PMI and retail sales, and ECB President Draghi's speech, ahead of the Fed Quarles's speech. Immediate resistance is located at 1.1379 (December 3 High), a break above targets 1.1420 (November 16 High). On the downside, support is seen at 1.1305 (November 30 Low), a break below could drag it till 1.1263 (November 26 Low).

USD/JPY: The dollar rebounded from a 2-week low touched in the previous session, after China expressed confidence that it can reach a trade deal with the United States, despite fresh warnings from President Donald Trump that he would revert to more tariffs if the two sides failed to resolve their differences. The major was trading 0.3 percent down at 113.05, having hit a low of 112.57 on Tuesday, its lowest since November 20. FxWirePro's Hourly Yen Strength Index stood at 69.21 (Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the  Fed Quarles's speech. Immediate resistance is located at 113.23 (November 22 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 112.42 (November 19 Low), a break below could take it lower 111.82 (October 25 Low).

GBP/USD: Sterling slumped for the fifth straight session after a parliament vote gave UK lawmakers more power over the next Brexit steps if Prime Minister Theresa May's European Union withdrawal deal is voted down. The major traded 0.3 percent down at 1.2682, having hit a low of 1.2658 on Tuesday; it’s lowest since June 2017. FxWirePro's Hourly Sterling Strength Index stood at -119.40 (Slightly Bearish) 0500 GMT. Investors’ attention will remain UK services PMI and UK Financial Policy Committee Statement, amid a lack of economic data from the U. S docket. Immediate resistance is located at 1.2809 (November 30 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2661 (August 15 Low), a break below targets 1.2600. Against the euro, the pound was trading 0.1 percent down at 89.26 pence, having hit a low of 89.44 on Tuesday, it’s lowest since Nov. 19.

AUD/USD: The Australian dollar plunged below the 0.7300 handle, after data showed the Australian economy grew just 0.3 percent in the third quarter, below expectations of 0.6 percent and previous quarter reading of 0.9 percent. The Aussie trades 0.6 percent down at 0.7295, having hit a high of 0.7393 on Monday; it’s highest since August 9. FxWirePro's Hourly Aussie Strength Index stood at -150.67 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7247 (November 8 Low), a break below targets 0.7199 (November 27 Low). On the upside, resistance is located at 0.7405 (August 6 High), a break above could take it near 0.7441 (July 31 High).

NZD/USD: The New Zealand dollar edged down from a 6-month high touched in the previous session, as concerns grew about whether a U.S-China trade war could be averted. The Kiwi trades 0.1 percent down at 0.6919, having touched a high of 0.6969 on Tuesday, its highest level June 15. FxWirePro's Hourly Kiwi Strength Index was at 79.48 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6976 (June 15 High), a break above could take it near 0.7023 (May 31 High). On the downside, support is seen at 0.6888 (December 3 Low), a break below could drag it below 0.6816 (November 9 Low).

Equities Recap

Asian shares slumped, as declines in long-term U.S. Treasury yields and resurgent trade concerns triggered investor worries about global economic growth.

MSCI's broadest index of Asia-Pacific shares outside Japan traded dropped 1.4 percent.

Tokyo's Nikkei declined 0.5 percent to 21,919.33 points, Australia's S&P/ASX 200 index plunged 0.8 percent to 5,668.40 points and South Korea's KOSPI eased 0.6 percent to 2,101.31 points.

Shanghai composite index fell 0.6 percent to 2,649.81 points, while CSI300 index traded 0.5 percent down at 3,252.00 points.

Hong Kong’s Hang Seng traded 1.6 percent lower at 26,823.18 points. Taiwan shares shed 1.7 percent to 9,916.74 points.

Commodities Recap

Crude oil prices declined, weighed down by rising U.S. inventories and a plunge in global stock markets as China's government warned of increasing economic headwinds. International benchmark Brent crude was trading 0.7 percent down at $62.32 per barrel by 0524 GMT, having hit a high of $63.56 on Tuesday, its highest since November 22. U.S. West Texas Intermediate was trading 0.4 percent down at $52.33 a barrel, after rising as high as $54.54 on Wednesday, its highest since the November 22.

Gold prices declined, after rising to a more than 5-week peak in the previous session, as the dollar rebounded. Spot gold was 0.3 percent down at $1,235.13 per ounce as of 0533 GMT, having touched a high of $1,241.82 on Tuesday, its highest level since Oct. 26. U.S. gold futures were down 0.5 percent at $1,240.2 per ounce.

Treasuries Recap

The Australian government bonds gained during late Asian session after the country’s gross domestic product (GDP) for the third quarter of this year, advanced at a pace slower than market expectations, also disappointing the previous quarter reading. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 4-1/2 basis points to 2.500 percent, the yield on the long-term 30-year bond hovered around 3.022 percent and the yield on short-term 2-year traded tad down at 1.963 percent.

The New Zealand government bonds gained, sending yields 2.7 basis points lower at the long end of the curve.

The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year climbed 42 Canadian cents to yield 2.186 percent. The 10-year yield touched its lowest intraday since July 20 at 2.168 percent.


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