News

Asia Roundup: Aussie eases on Hong Kong unrest, dollar rallies against yen amid hopes of economic recovery, investors eye ECB Lagarde’s speech – Wednesday, May 27th, 2020

Market Roundup

  • Gold hovers near 2-week low
  • Oil slips on demand worries

Economic Data Ahead

  • (0400 ET/0800 GMT) Switzerland ZEW Survey – Expectations (May)

Key Events Ahead

  • (0330 ET/0730 GMT) ECB’s President Lagarde speech
  • (0530 ET/0930 GMT) ECB’s De Guindos speech

FX Beat

DXY: The dollar index steadied after tumbling to a 3-week low in the prior session, amid worries about the U.S. response to China’s proposed security law and renewed protests in Hong Kong. The greenback against a basket of currencies traded 0.1 percent up at 99.12, having touched a low of 99.01 on Tuesday, its lowest since May 4.

EUR/USD: The euro declined, reversing some of its previous session gains, ahead of details from the European Commission of a financial rescue fund for the bloc later in the day. The European currency traded 0.2 percent down at 1.0954, having touched a high of 1.1008 on Thursday, its highest since May 1. Investors’ attention will remain on a series of data from Eurozone economies ahead of the Richmond Fed manufacturing index and Fed’s Beige Book. Immediate resistance is located at 1.0999, a break above targets 1.1025. On the downside, support is seen at 1.0940, a break below could drag it below 1.0911.

USD/JPY: The dollar rose, supported by optimism around several economies re-opening. However, increasing U.S.-China tensions over Beijing’s proposed security law for Hong Kong limited the upside. The major was trading 0.1 percent up at 107.57, having hit a high of 108.08 last week, its highest since Apr. 13. Investors’ will continue to track the broad-based market sentiment, ahead of the Richmond Fed manufacturing index and Fed’s Beige Book. Immediate resistance is located at 107.76, a break above targets 108.10. On the downside, support is seen at 107.26, a break below could take it near at 107.07 (21-DMA).

GBP/USD: Sterling eased after rising to a 2-week peak in the prior session on Prime Minister Boris Johnson plans to ease Britain’s coronavirus lockdown, including restrictions on retail, if government tests are met. The major traded 0.2 percent down at 1.2310, having hit a high of 1.2363 on Tuesday, it’s highest since May 12. Investors’ attention will remain on the geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2296, a break above could take it near 1.2343. On the downside, support is seen at 1.2361, a break below targets 1.2395. Against the euro, the pound was trading flat at 89.03 pence, having hit a low of 90.00 on Thursday, it’s lowest since March 27.

AUD/USD: The Australian dollar retreated from a 2-1/2 month peak amid concern about increased tension in Hong Kong. On Tuesday, U.S. President Donald Trump said Washington was working on a strong response to China’s planned national security law for Hong Kong, adding it would be announced before the end of the week. The Aussie trades 0.1 percent down at 0.6642, having hit a high of 0.6675 on Tuesday, it’s highest since March 9. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6707, a break above could take it near 0.6745. On the downside, support is seen at 0.6597, a break below targets 0.6577 (5-DMA).

Equities Recap

Asian shares slumped amid fresh political unrest in Hong Kong over Beijing’s proposed national security laws in the city.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.1 percent.

Tokyo’s Nikkei rose 0.7 percent to 21,419.23 points, Australia’s S&P/ASX 200 index eased 0.1 percent to 5,775.00 points. South Korea’s KOSPI gained 0.1 percent to 2,031.20 points.

Shanghai composite index fell 0.3 percent to 2,836.80 points, while CSI 300 index traded 0.7 percent down at 3,845.61 points.

Hong Kong’s Hang Seng traded 0.8 percent lower at 23,209.97 points. Taiwan shares added 0.2 percent to 11,014.66 points.

Commodities Recap

Crude oil prices declined on revived concerns over how quickly fuel demand will recover even as coronavirus lockdowns begin to ease in many countries. International benchmark Brent crude was trading 0.5 percent lower at $35.90 per barrel by 0555 GMT, having hit a high of $36.96 on Thursday, its highest since March 11. U.S. West Texas Intermediate was trading 0.2 percent down at $34.05 a barrel, after rising as high as $34.64 on Thursday, its highest since March 11.

Gold prices plunged to a 2-week low as optimism around several economies re-opening dented the metal’s safe-haven appeal, although increasing U.S.-China frictions over Beijing’s proposed security law for Hong Kong limited downside. Spot gold eased 0.2 percent to $1,708.23 per ounce by 0557 GMT, having touched a low of $1,705.29 earlier, its lowest since May 13. U.S. gold futures were down 0.1 percent to $1,703.20.

Treasuries Recap

The U.S. 2-year Treasury yields were last 0.178 percent, having risen from a record low of 0.105 percent on May 8 but have held below 0.20 percent since that date. The benchmark 10-year note yields rose four basis points to 0.697 percent.


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