News

Asia Roundup: Antipodeans ease on renewed U.S.-China trade tensions, greenback surges amid Fed December rate hike expectations, Asian shares plunge – Thursday, December 6th, 2018  

Market Roundup

  • China telecoms giant Huawei CFO arrested in Canada
     
  • China hails Trump-Xi summit, but offers no new details
     
  • BOJ's Kuroda dismisses chance of near-term rate hike
     
  • China c.bank injects 187.5 bln yuan in 1-year MLF rollover, rate unchanged
     
  • OPEC, Russia move closer to cutting oil output
     
  • House Democrats plan to send Trump aides' transcripts to Mueller
     
  • Japan Dec Reuters Tankan Business Conditions, 23, 26 prev
     
  • Australia Oct Retail Sales (m/m), 0.3%, 0.2% f'cast, 0.2% prev, 0.1% r'vsd
     
  • Australia Oct Trade Balance G&S (A$), 2316 mln, 3200 mln, 3017 mln prev, 2940 mln r'vsd
     

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Oct Industrial Orders (m/m), -0.4% f'cast, 0.3% prev

Key Events Ahead

  • (0230 ET/0730 GMT) ECB Vice President Luis de Guindos delivers opening remarks at the 14th Joint ECB/CEPR Labour Market Workshop in Frankfurt
     
  • (0300 ET/0800 GMT) General Council meeting of the ECB in Frankfurt
     
  • (0850 ET/1350 GMT) BOC Governor Stephen Poloz will deliver a speech about the central bank's interest rate decision on Dec. 5. in Toronto
     
  • (1200 ET/1700 GMT) Fed issues quarterly Flow of Funds Assets in Washington
     
  • (1215 ET/1715 GMT) Atlanta Fed President Raphael Bostic speaks on the national outlook before a Georgia Economic Outlook event in Atlanta
     
  • (1830 ET/2330 GMT) New York Fed President John Williams participates in moderated discussion in New York
     
  • (1845 ET/2345 GMT) Fed Chairman Jerome Powell gives brief welcome remarks before the Housing Assistance Council Rural Housing Conference in Washington
     

FX Beat

DXY: The dollar index surged, amid growing expectations that the Federal Reserve policymakers will raise interest rates again at their Dec 18-19 meeting. The greenback against a basket of currencies trades 0.1 percent up at 97.12, having touched a low of 96.38 on Tuesday, its lowest since Nov 22. FxWirePro's Hourly Dollar Strength Index stood at 63.27 (Bullish) by 0400 GMT.

EUR/USD: The euro consolidated within narrow ranges as investors remained on the sidelines on news that President Emmanuel Macron's government is dropping further fuel-tax hikes in next year's budget amid protests across France over living costs. The European currency traded 0.05 percent up at 1.1347, having touched a high of 1.1418 on Tuesday, its highest since Nov. 23. FxWirePro's Hourly Euro Strength Index stood at 20.55 (Neutral) by 0400 GMT. Investors’ attention will remain on German Factory Orders, ahead of the U.S. Challenger Job cuts, ADP employment Change, trade balance, unemployment benefit claims, unit labour cost, services PMI form both Makit and ISM; and speeches from Fed policymakers. 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 slumped to a near 2-week low, as signals from the Federal Reserve that it may be nearing an end to its 3-year rate hiking cycle triggered the slide in the U.S. Treasury yields.  The major was trading 0.5 percent down at 112.68, having hit a low of 112.57 on Tuesday, its lowest since November 20. FxWirePro's Hourly Yen Strength Index stood at 170.25 (Highly Bullish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Challenger Job cuts, ADP employment Change, trade balance, unemployment benefit claims, unit labour cost, services PMI form both Makit and ISM; and speeches from Fed policymakers. Immediate resistance is located at 113.50 (November 6 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 eased amid growing concerns whether British Prime Minister Theresa May manages to get her Brexit withdrawal deal through Parliament. The major traded 0.1 percent down at 1.2725, having hit a low of 1.2658 on Tuesday; it’s lowest since June 2017. FxWirePro's Hourly Sterling Strength Index stood at -2.91 (Neutral) 0400 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. 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 89.18 pence, having hit a low of 89.44 on Tuesday, it’s lowest since Nov. 19.

AUD/USD: The Australian dollar declined to an over 1-week low after data showed domestic retail sales grew 0.3 percent in October from a downwardly revised 0.1 percent in September and expectations of a modest 0.2 percent rise. The Aussie trades 0.5 percent down at 0.7231, having hit a low of 0.7218; it’s lowest since November 27. FxWirePro's Hourly Aussie Strength Index stood at -158.98 (Highly Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7199 (November 27 Low), a break below targets 0.7164 (November 13 Low). On the upside, resistance is located at 0.7268 (November 22 High), a break above could take it near 0.7325 (November 19 High).

NZD/USD: The New Zealand dollar tumbled to a 6-day low, as concerns of renewed U.S.-China trade tensions dented investor sentiment.  The Kiwi trades 0.4 percent down at 0.6873, having touched a high of 0.6969 on Tuesday, its highest level June 15. FxWirePro's Hourly Kiwi Strength Index was at -90.31 (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 0.6976 (June 15 High), a break above could take it near 0.7023 (May 31 High). On the downside, support is seen at 0.6816 (November 9 Low), a break below could drag it below 0.6753 (November 27 Low).

Equities Recap

Asian shares slumped after an inversion in a part of the U.S. Treasury yield curve triggered market concerns about economic growth.

MSCI's broadest index of Asia-Pacific shares outside Japan traded dropped 1.7 percent.

Tokyo's Nikkei declined 1.9 percent to 21,501.62 points, Australia's S&P/ASX 200 index plunged 0.2 percent to 5,657.70 points and South Korea's KOSPI eased 1.5 percent to 2,070.18 points.

Shanghai composite index fell 1.7 percent to 2,605.05 points, while CSI300 index traded 2.2 percent down at 3,181.61 points.

Hong Kong’s Hang Seng traded 2.8 percent lower at 26,060.52 points. Taiwan shares shed 2.3 percent to 9,684.72 points.

Commodities Recap

Crude oil prices declined, ahead of a meeting by producer group OPEC that is expected to result in a supply cut aimed at draining a glut. International benchmark Brent crude was trading 0.9 percent down at $61.02 per barrel by 0450 GMT, having hit a high of $63.56 on Tuesday, its highest since November 22. U.S. West Texas Intermediate was trading 1.2 percent down at $52.30 a barrel, after rising as high as $54.54 on Tuesday, its highest since the November 22.

Gold prices rallied, hovering towards a 5-week peak touched earlier in the week as the dollar declined amid a spike in risk aversion. Spot gold was 0.2 percent up at $1,239.94 per ounce at 0457 GMT, having touched a high of $1,241.82 on Tuesday, its highest level since Oct. 26. U.S. gold futures were up 0.3 percent at $1,245.7 per ounce.

Treasuries Recap

The Australian 3-year bond futures edged up to 98.050, matching a peak from early September. The 10-year contract hit a three-month peak at 97.5250, and a break there would take it to ground not trod since June 2017.

The yields on New Zealand government 10-year bonds fell to 2.478 percent, the lowest since May 2016 and down a huge 40 basis points in just the past month.

The Canadian government bond prices rose across the yield curve, with the two-year up 12.5 Canadian cents to yield 2.051 percent and the 10-year rising 43 Canadian cents to yield 2.120 percent. The 10-year yield hit its lowest intraday level since July 19 at 2.118 percent.


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