News

Asia Roundup: Kiwi at 2-1/2 week trough ahead of RBNZ policy decision, yen gains as investors turn cautious amid U.S.-China trade talks, Asian shares rally – Friday, September 20th, 2019

Market Roundup

  • Euro higher after hawkish central bank shift
     
  • Sterling rallies on Brexit deal hopes
     
  • Gold up poised for first weekly gain in four
     
  • Oil prices set for its biggest weekly gain in months
     

Economic Data Ahead

  • No major economic releases

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index eased, extending previous session losses, after the Federal Reserve on Wednesday cut interest rates by 25 basis points to counter risks including weak global growth and resurgent trade tensions, while signaling a higher bar to further reductions in borrowing costs. The greenback against a basket of currencies traded 0.2 percent down at 98.21, having touched a low of 97.19 earlier, its lowest since August 16.

EUR/USD: The euro rose, extending previous session gains as the greenback eased after the Fed had cut interest rates for the second time this year on Wednesday to help sustain economic expansion but gave mixed signals on future rate cuts. t. The European currency traded 0.1 percent up at 1.1056, having touched a high of 1.1109 last week, its highest since August 27. Investors’ attention will remain on the Eurozone preliminary consumer confidence index, ahead of Fed officials' speeches. Immediate resistance is located at 1.1084 (September 5 High), a break above targets 1.1109 (September 13 High). On the downside, support is seen at 1.1015 (September 9 Low), a break below could drag it below 1.0963 (August 30 High).

USD/JPY: The dollar declined as investors turned cautious as central banks in Switzerland and the UK refrained from cutting rates and caution about developments in U.S.-China trade talks. On Thursday, U.S. and Chinese deputy trade negotiators resumed talks for the first time in nearly two months, trying to lay the groundwork for high-level talks in early October. The major was trading 0.1 percent down at 107.85, having hit a high of 108.47 on Thursday, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of Fed officials' speeches. Immediate resistance is located at 108.63 (July 5 High), a break above targets 108.99 (July 10 High). On the downside, support is seen at 107.52 (September 12 Low), a break below could take it lower at 106.96 (21-DMA).

GBP/USD: Sterling rallied to a 2-month peak after European Commission President Jean-Claude Juncker said he thought Brussels could reach a deal with Britain to leave the European Union and that if the Irish border backstop which the British government wants to be removed could be replaced with alternatives, it would not be needed. The major traded 0.4 percent up at 1.2564, having hit a high of 1.2582 earlier, it’s highest since July 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2605 (June 17 High), a break above could take it near 1.2644 (May 31 High). On the downside, support is seen at 1.2480 (5-DMA), a break below targets 1.2404 (10-DMA). Against the euro, the pound was trading 0.3 percent up at 87.90 pence, having hit a high of 87.86 earlier, it’s highest since May 22.

AUD/USD: The Australia dollar rebounded from a 2-1/2 week low as investors are focused on U.S.-China trade talks in Washington, aimed at laying the groundwork for high-level discussions next month. The Aussie traded 0.2 percent up at 0.6805, having hit a low of 0.6778 earlier, it’s lowest since September 4. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6770 (August 16 Low), a break below targets 0.6735 (September 14 Low). On the upside, resistance is located at 0.6861 (July 31 High), a break above could take it near 0.6916 (September 6 High).

NZD/USD: The New Zealand dollar plunged to a 2-1/2 week trough as investor eye Reserve Bank of New Zealand's policy meeting next week, where it is expected to keep the official cash rate at the record low of 1.00 percent, but may keep the door open to implement lower interest rates. The Kiwi trades lower at 0.6299, having touched a low of 0.6285 earlier, its lowest level since September 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6338 (5-DMA), a break above could take it near 0.6362 (21-DMA). On the downside, support is seen at 0.6269 (September 3 Low), a break below could drag it below 0.6235.

Equities Recap

Asian shares rallied as economic stimulus around the world eased fears over slowing growth.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.

Tokyo's Nikkei gained 0.2 percent to 22,079.09 points, Australia's S&P/ASX 200 index rallied 0.2 percent to 6,730.80 points and South Korea's KOSPI surged 0.5 percent to 2,091.53 points.

Shanghai composite index rose 0.2 percent to 3,005.09 points, while CSI 300 index traded 0.2 percent up at 3,931.40 points.

Hong Kong’s Hang Seng traded 0.05 percent higher at 26,466.55 points. Taiwan shares added 0.3 percent to 10,929.69 points.

Commodities Recap

Crude oil prices steadied and were on track for a more-than-7 percent jump this week, their biggest in months, amid fresh tensions in the Middle East after a key Saudi Arabian supply facility was knocked out in an attack last weekend. International benchmark Brent crude was trading flat at $64.60 per barrel by 0442 GMT, having hit a high of $69.64 on Monday, its highest since May 30. U.S. West Texas Intermediate was trading 0.2 percent up at $58.69 a barrel, after rising as high as $63.33 on Monday, its highest since May 21.

Gold prices edged higher and were set for their first weekly gain in one month, supported by a softer dollar and caution about developments in the U.S.-China trade talks. Spot gold was trading 0.4 percent up at $1,504.65 per ounce by 0445 GMT, having touched a low of $1,483.06 on Wednesday, its lowest since August 13 but was on track for its first weekly gain in four, having risen nearly 1 percent so far this week. U.S. gold futures were up 0.3 percent at $1,510.9 per ounce.

Treasuries Recap

The Japanese government bond yields at the long end of the curve rose after the Bank of Japan said it will reduce slightly the amount of debt it purchases for its quantitative easing. The benchmark 10-year JGB futures fell 0.01 point to 154.76. The 10-year JGB yield rose 0.5 basis point to minus 0.225 percent. The 20-year JGB yield rose 1.5 basis points to 0.180 percent. The 30-year JGB yield increased 3 bps to 0.345 percent. The 40-year JGB yield rose 5.5 bps to 0.405 percent. At the short end of the curve, the two-year JGB yield fell 0.5 basis point to minus 0.310 percent.

The Australian government bonds rallied during Asian session of the last trading day of the week amid a muted session that witnessed data of little economic significance. However, the Federal Reserve’s 25bp rate cut on Wednesday added to decline in yields, which investors are wary of neglecting in the wake of ongoing global geopolitical tensions. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 3 basis points to 1.058 percent, the yield on the long-term 30-year bond suffered nearly 2 basis points to 1.636 percent and the yield on short-term 2-year suffered nearly 1-1/2 basis points to 0.779 percent.


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