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Asia Roundup: Antipodeans ease on diverging monetary policies, greenback rallies on Fed's hawkish stance, Asian shares tumble – Friday, November 9th, 2018

Market Roundup

  • Fed leaves rates unchanged, says U.S. economy strong
     
  • Recounts, runoffs loom over high-profile elections in Florida, Georgia
     
  • POLL-Chance of no-deal Brexit holds firm at one-in-four as clock ticks
     
  • EU wants customs border in Irish sea in case of no-deal Brexit-Times, citing May letter
     
  • Australia central bank upbeat on economy, but trade war a “material risk”
     
  • U.S. ambassador expects 'frank' exchanges in China dialogue on Friday
     
  • Australia Housing Finance, -1.0%, -1.0% f'cast, -2.1% prev
     
  • China PPI (y/y), 3.3%, 3.3% f'cast, 3.6% prev
     
  • China CPI (y/y), 2.5%, 2.5% f'cast, 2.5% prev
     
  • U.S. fund investors pull most cash in three weeks from stocks -Lipper
     
  • Foreign CB US debt holdings +$639 mln to $3.415 trln Nov 7 week
     
  • Treasuries +$185 mln to $3.042 trln, Agencies +$614 mln to 306. 038 bln
     

Economic Data Ahead

  • (0245 ET/0745 GMT) France Industrial Output (m/m), -0.3% f'cast, 0.3% prev
     
  • (0430 ET/0930 GMT) Great Britain GDP Estimate (y/y), 1.5% f'cast, 1.5% prev
     
  • (0430 ET/0930 GMT) Great Britain Industrial Output (y/y), 0.4% f'cast, 1.3% prev
     
  • (0430 ET/0930 GMT) Great Britain Manufacturing Output (y/y), 0.4% f'cast, 1.3% prev
     
  • (0430 ET/0930 GMT) Great Britain Goods Trade Balance GBP, -11.25 bln f'cast, -11.20 bln
     
  • (0430 ET/0930 GMT) Great Britain GDP Prelim (y/y), 1.5% f'cast, 1.2% prev
     
  • (0430 ET/0930 GMT) Great Britain Business Invest (m/m), 0.2% f'cast, -0.7% prev
     

Key Events Ahead

  • (0400 ET/0900 GMT) Randal Quarles, the Federal Reserve's vice chair for supervision, speaks in Washington
     
  • (0500 ET/1000 GMT) ECB board member Benoit Coeure speaks in Frankfurt
     
  • (0830 ET/1330 GMT) Federal Reserve Bank of New York President John Williams speaks in New York
     
  • (0845 ET/1345 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks in New York
     
  • (0930 ET/1830 GMT) Andy Haldane, Bank of England Chief Economist, speaks in London
     

FX Beat

DXY: The dollar index rallied to a 1-week peak, boosted by Fed's largely upbeat economic outlook and its intent to keep tightening monetary policy. The greenback against a basket of currencies trades 0.1 percent up at 96.77, having touched a high of 96.60, its highest since November 1. FxWirePro's Hourly Dollar Strength Index stood at 109.58 (Highly Bullish) by 0400 GMT.

EUR/USD: The euro declined after quarterly economic forecasts released yesterday, showed Eurozone growth is expected to slow in the coming years and predicted a protracted slowdown until 2020. The European currency traded 0.2 percent down at 1.1346, having touched a low of 1.1341 earlier, its lowest since November 1. FxWirePro's Hourly Euro Strength Index stood at -118.26 (Highly Bearish) by 0400 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. producer price index and Fed's Quarles speech. Immediate resistance is located at 1.1420 (October 26 High), a break above targets 1.1550 (October 22 High). On the downside, support is seen at 1.1302 (October 31 Low), a break below could drag it till 1.1264.

USD/JPY: The dollar eased on profit-taking after rising to a 1-month month peak in the previous session as the U.S. Federal Reserve kept interest rates steady but reaffirmed its monetary tightening stance. The major was trading 0.1 percent down at 113.89, having hit a high of 114.08 on Thursday, its highest since October 5. FxWirePro's Hourly Yen Strength Index stood at -48.51 (Neutral) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index and Fed's Quarles speech. Immediate resistance is located at 114.55 (October 4 High), a break above targets 115.00. On the downside, support is seen at 113.52 (October 3 Low), a break below could take it lower 113.07 (November 5 Low).

GBP/USD: Sterling eased, extending previous session losses, as British Prime Minister Theresa May stepped up attempts to court European support for a Brexit deal. The major traded 0.1 percent down at 1.3047, having hit a high of 1.3174 on Wednesday; it’s highest since October 17. FxWirePro's Hourly Sterling Strength Index stood at 27.59 (Neutral) 0400 GMT. Investors’ attention will remain on the UK prelim gross domestic product, manufacturing production, industrial prod, and trade balance data, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3106 (November 6 High), a break above could take it near 1.3181 (October 15 High). On the downside, support is seen at 1.3011 (October 19 Low), a break below targets 1.2936 (October 23 Low). Against the euro, the pound was trading flat at 86.96 pence, having hit a high of 86.91 earlier, it’s highest since Apr. 27.

AUD/USD: The Australian dollar dropped as the RBA upgraded its growth forecasts for the next couple of years but still did not see a strong case for a near-term rate rise as inflation is expected to remain subdued. The Aussie trades 0.2 percent down at 0.7243, having hit a high of 0.7302 on Thursday; it’s highest since September 26. FxWirePro's Hourly Aussie Strength Index stood at 11.36 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7205 (November 6 Low), a break below targets 0.7164 (October 13 Low). On the upside, resistance is located at 0.7300, a break above could take it near 0.7345.

NZD/USD: The New Zealand dollar fell after the Federal Reserve underlined the diverging monetary policies between the United States and New Zealand. The Kiwi trades 0.2 percent down at 0.6740, having touched a high of 0.6814 on Wednesday, its highest level since August 1. FxWirePro's Hourly Kiwi Strength Index was at 92.64 (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 0.6832 (July 31 High), a break above could take it near 0.6880. On the downside, support is seen at 0.6720 (August 3 Low), a break below could drag it below 0.6687 (July 3 Low)

Equities Recap

Asian shares tumbled, while the greenback surged as the Fed held interest rates steady but remained on track to continue gradually raising borrowing costs, indicating to healthy economic prospects.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 1.1 percent.

Tokyo's Nikkei declined 0.9 percent to 22,296.95 points, Australia's S&P/ASX 200 index eased 0.1 percent to 5,921.80 points and South Korea's KOSPI slipped 0.1 percent to 2,090.08 points.

Shanghai composite index fell 0.9 percent to 2,609.75 points, while CSI300 index traded 1.0 percent up at 3,180.63 points.

Hong Kong’s Hang Seng traded 2.1 percent lower at 25,683.69 points. Taiwan shares shed 1.2 percent to 9,830.01 points.

Commodities Recap

Crude oil prices declined as rising supply and concerns of an economic slowdown dented market sentiment, with U.S. crude down about 20 percent since early October. International benchmark Brent crude was trading 0.2 percent down at $70.78 per barrel by 0412 GMT, having hit a low of $70.44 earlier, its lowest since August 16. U.S. West Texas Intermediate was trading 0.3 percent down at $60.59 a barrel, after falling as low as $60.34, its lowest since Mar. 14.

Gold prices eased as the dollar steadied after the U.S. Federal Reserve kept interest rates steady with a fourth hike for this year expected next month. Spot gold eased 0.4 percent at $1,218.02 per ounce at 0417 GMT, having touched a low of $1,217.74 earlier, its lowest since Nov. 1 and was down about 0.9 percent for the week and on track to post its biggest weekly fall since August. U.S. gold futures was down 0.2 percent to $1,223 per ounce.

Treasuries Recap

The Australian long-term government bonds gained during Asian session after the Reserve Bank of Australia (RBA) Board said there is no strong case for any near-term policy change in its November Statement on Monetary Policy (SoMP). The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1/2 basis point to 2.762 percent, the yield on the long-term 30-year bond dipped 1-1/2 basis points to 3.268 percent, but the yield on short-term 2-year up 1 basis point to 2.092 percent.

The New Zealand government bonds fell sending yields about 2.5-3 basis points higher across the curve.

The Canadian government bond prices were mixed across a slightly flatter yield curve. The 10-year rose 1 Canadian cent to yield 2.537 percent.


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