Asia Roundup: Antipodeans at 1-month peak as PBoC stands pat, dollar gains against yen on U.S.-China trade deal hopes, Asian shares rally – Monday, October 21st, 2019

Market Roundup

  • PBoC kept interest rates unchanged at 4.20%
  • New Zealand Credit Card Spending growth slowed to 4.8% in September from 6% in August
  • Gold holds steady on Brexit uncertainties

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index surged as investors now await a U.S. Federal Reserve meeting at the end of the month that could offer further signs of monetary easing. The greenback against a basket of currencies traded 0.2 percent up at 97.34 having touched a low of 97.14 on Friday, its lowest since August 9.

EUR/USD: The euro declined after rising to a 2-month peak in the previous session, as the greenback rebounded from multi-week lows against a basket of currencies. The European currency traded 0.1 percent lower at 1.1148, having touched a high of 1.1171 on Friday, its highest since August 14.  Immediate resistance is located at 1.1200, a break above targets 1.1230. On the downside, support is seen at 1.1130, a break below could drag it below 1.1101.

USD/JPY: The dollar rebounded from a near 1-week low hit earlier in the week after U.S. President Donald Trump said that he thought a trade deal between the United States and China would be signed by the time the Asia-Pacific Economic Cooperation meetings take place in Chile on November 16-17. The major was trading 0.1 percent up at 108.45 having hit a low of 108.29 earlier, its lowest since October 15. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.12 (10-DMA), a break below could take it near at 108.03 (October 14).

GBP/USD: Sterling slumped, retreating from a 5-month high recorded last week after the British parliament delayed a crucial vote on a Brexit withdrawal agreement. On Saturday, lawmakers voted to withhold a decision on Prime Minister Boris Johnson’s deal, a move that forced him to seek from the EU a third postponement of Britain’s departure from the bloc. The major traded 0.6 percent down at 1.2873, having hit a high of 1.2989 on Thursday, it’s highest since May 13. Immediate resistance is located at 1.3000, a break above could take it near 1.3040. On the downside, support is seen at 1.2815 (5-DMA), a break below targets 1.2748. Against the euro, the pound was trading 0.7 percent down at 86.53 pence, having hit a high of 85.74 on Thursday, it’s highest since May 8.

AUD/USD: The Australian dollar rallied to an over 1-month peak after China unexpectedly kept unchanged its new benchmark lending rate, suggesting Beijing is keen to avoid overly loosening monetary policy for fear it may push up already-high debt levels across the economy. The Aussie trades 0.1 percent up at 0.6861, having hit a high of 0.6865 earlier, it’s highest since September 18. Immediate support is seen at 0.6830, a break below targets 0.6811. On the upside, resistance is located at 0.6875, a break above could take it near 0.6894.

NZD/USD: The New Zealand dollar surged to multi-week highs despite the dismal New Zealand consumer spending data and expectations the RBNZ will deliver a rate cut before the year-end. The economy's annualized Credit Card Spending growth slowed to 4.8 percent in September from 6 percent in August, supporting the dovish Reserve Bank of New Zealand expectations. The Kiwi trades 0.2 percent up at 0.6393, having touched a high of 0.6404 earlier, its highest level since September 13. Immediate resistance is located at 0.6422 (August 21 High), a break above could take it near 0.6450 (September 12 High). On the downside, support is seen at 0.6355, a break below could drag it below 0.6322 (5-DMA).

Equities Recap

Asian shares advanced amid hopes for progress in resolving the U.S.-China trade war and expectations for greater investment inflows into Hong Kong.

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

Tokyo's Nikkei gained 0.3 percent to 22,548.90 points, Australia's S&P/ASX 200 index rose 0.05 percent to 6,652.50 points and South Korea's KOSPI rallied 0.2 percent to 2,064.29 points.

Shanghai composite index declined 0.2 percent to 2,932.03 points, while CSI 300 index traded 0.1 percent up at 3,872.36 points.

Hong Kong’s Hang Seng traded 0.1 percent higher at 26,741.01 points. Taiwan shares added 0.05 percent to 11,184.15 points.

Commodities Recap  

Crude oil prices consolidated within narrow ranges amid persistent concerns about the global economic outlook and the impact on oil demand. International benchmark Brent crude was trading flat at $59.53 per barrel by 0457 GMT, having hit a high of $60.66 earlier in the month, its highest since September 30. U.S. West Texas Intermediate was trading flat at $53.84 a barrel, after rising as high as $54.60 earlier in the month, its highest since September 30.

Gold prices held firm as uncertainties swirled over Brexit delay, though a firmer greenback weighed on the safe-haven metal. Spot gold traded flat at $1,489.52 an ounce by 0502 GMT, having touched a low of $1,473.88 earlier in the month, its lowest since October 1. U.S. gold futures were little changed at $1,494.20.

Treasuries Recap

The Japanese government bond prices eased, with the benchmark 10-year yield hitting two-and-a-half-month highs. The 10-year JGB yield rose 1.5 basis points to minus 0.140 percent, its highest since Aug. 1, and has risen nine basis points from Oct. 7 low of minus 0.230 percent. The 20-year JGB yield rose 2 basis points to 0.250 percent while the 30-year yield rose 1 basis point to 0.410 percent, both nearing their highs for the month. The five-year yield fell 0.5 basis point, however, to minus 0.275 percent, after having risen to a five-week high of minus 0.265 percent earlier. Benchmark 10-year JGB futures fell 0.16 point to 154.07.

The Australian government bonds remained tad higher during Asian session of the first trading day of the week as investors remained side-lined amid muted hours that witnessed data of little economic significance. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 1.141 percent, the yield on the long-term 30-year bond edged 1 basis point down at 1.728 percent and the yield on short-term 2-year too traded 1 basis point lower at 0.794 percent.

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