News

Asia Roundup: Antipodeans touch multi-week highs, dollar index hits 5-1/2 week low as Fed continues to weigh, Asian shares volatile amid holiday-thinned-trading – Monday, March 20th, 2017

Market Roundup

  • Merkel: We want open markets, free trade, no barriers – Reuters
     
  • Aso: Believe G20 was able to confirm importance of free trade, despite language in communiqué – Reuters
     
  • Aso: No one at G20 meeting said they resist free trade – Reuters
     
  • New Zealand consumer confidence down slightly in Mar – Reuters
     
  • Japan secures reprieve from currency manipulation charge – The Business Times (Singapore)
     
  • PBOC sets midpoint USD/CNY reference rate at 6.8998 versus 6.8873 Fri – Reuters
     
  • South Korea complains to WTO over China's response to anti-missile system-minister – Reuters

Economic Data Ahead

  • (0300 ET/0700 GMT) Germany Producer Prices YY % Feb last 2.40
     
  • (0300 ET/0700 GMT) Germany Producer Prices MM % Feb last 0.70
     
  • (0600 ET/1000 GMT) Eurozone Wages In Euro Zone % Q4  last 1.60
     
  • (0600 ET/1000 GMT) Eurozone Labour Costs YY % Q4 last 1.50

Key Events Ahead

  • (0700 ET/1100 GMT) Belgium 10Y E1.500B 0.800% 22/06/27 EUR2.7BN-
     
  • (0700 ET/1100 GMT) Belgium 21Y E1.000B 1.900% 22/06/38 EUR3.2BN
     
  • (0700 ET/1100 GMT) Belgium24Y E0.500B 4.250% 28/03/41 TOTAL
     

FX Beat

DXY: The dollar plunged across the board as the Federal Reserve's less hawkish-than-expected comments continued to weigh on market sentiment. The greenback against a basket of currencies traded 0.1 percent down at 100.15, having hit a low of 100.13 earlier, its lowest since Feb. 9. FxWirePro's Hourly Dollar Strength Index stood at -141.39 (Highly Bearish) by 0500 GMT.

EUR/USD: The euro rose, reversing most of its previous session losses, as the greenback bulls stayed on the defensive after the Federal Reserve's rate guidance last week proved to be less hawkish than expected. The European currency traded 0.2 percent higher at 1.0763, hovering towards a high of 1.0782 hit on Friday, its highest since Feb. 6. FxWirePro's Hourly Euro Strength Index stood at 20.59 (Neutral) by 0500 GMT. Investors now await German producer price index, ahead of Fed Evan's and U.S. President Trump's speech. Immediate resistance is located at 1.0791 (Feb 6 High), a break above targets 1.0830. On the downside, support is seen at 1.0721 (23.6% retrace of 1.0782 and 1.0525), a break below could drag it near 1.0684 (38.2% retrace).

USD/JPY: The dollar tumbled to a fresh near 3-week low, amid holiday-thinned markets as Japanese markets remained closed today on account of Vernal Equinox Day. Moreover, a cautious tone prevalent in the markets following the G20 meeting outcome strengthened the Japanese yen's safe haven appeal. The major traded 0.15 percent down at 112.52, having hit a low of 112.47 earlier, its lowest since Feb 28. FxWirePro's Hourly Yen Strength Index stood at 82.23 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of the Chicago Fed national activity index, Fed Evan's and U.S. President Trump's speech. Immediate resistance is located at 112.95 (Feb 24 High), a break above targets 113.12 (78.6% retracement of 115.50 and 112.47). On the downside, support is seen at 112.24 (trendline), a break below could take it near 112.00.

GBP/USD: Sterling steadied after rising above the 1.2400 handle to a 2-week high in the previous session, as one of Bank of England policymakers voted for a rise in rates last week. The major trades flat at 1.2390, having hit a high of 1.2404 on Friday, its highest since Mar. 1. FxWirePro's Hourly Sterling Strength Index stood at 8.84 (Neutral) by 0500 GMT. Investors’ focus now remains on BoE’s Haldane's speech, ahead of U.S. President Trump’s presser. Immediate resistance is located at 1.2430 (Jan 6 High), a break above could take it near 1.2471 (78.6 % retracement of 1.2569 and 1.2109). On the downside, support is seen at 1.2324 (21-DMA), a break below targets 1.2300. Against the euro, the pound traded 0.3 percent down at 86.87 pence, having hit a high of 86.58 earlier, its highest since Mar 9.

AUD/USD: The Australian dollar rallied to a more than 3-week high as the greenback extends losses versus its major competitors, following a less hawkish-than-expected Fed decision last week.  However, weaker oil and copper prices limited the upside in the major. The Aussie trades 0.3 percent up at 0.7726, having hit a high of 0.7727 earlier, it’s highest since Feb. 23. FxWirePro's Hourly Aussie Strength Index stood at 101.44 (Highly Bullish) by 0500 GMT. Investors now await Fed official Evans speech, ahead of RBA minutes release due tomorrow. Immediate support is seen at 0.7663 (Previous Session Low), a break below targets 0.7629 (21-DMA). On the upside, resistance is located at 0.7740 (Feb 23 High)., a break above could take it till 0.7778 (Nov 8 High).

NZD/USD: The New Zealand dollar rose, hitting a fresh 3-week high as the greenback weakened after the Federal Reserve did not alter its earlier forecast for a total of three rate hikes this year.  The Kiwi trades 0.3 percent up at 0.7726, having touched a peak of 0.7054 earlier in the day, it’s strongest since Mar. 3. FxWirePro's Hourly Kiwi Strength Index was at 131.64 (Highly Bullish) by 0500 GMT. Investors’ will continue to track board based market sentiment, ahead of Fed official Evans speech. Immediate resistance is located at 0.7067 (50.0% retrace of 0.7244 and 0.6890), a break above could take it near 0.7100. On the downside, support is seen at 0.6977 (5-DMA), a break below could drag it near 0.6950.

Equities Recap

Asian shares traded in a volatile market, while the greenback eased to a 5-1/2 week low as the Federal Reserve's slower-than-expected interest rate rise path continued to weaken market sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.03 percent.

Australia's S&P/ASX 200 index eased 0.50 percent to 5,770.70 points and South Korea's KOSPI was trading 0.52 percent down at 2,154.08 points.

Shanghai composite index edged down 0.18 percent to 3,232.48 points, while CSI300 index was trading 0.37 percent lower at 3,433.10 points.

Hong Kong’s Hang Seng was trading 0.54 percent higher at 24,441.33 points. Taiwan shares added 0.04 percent at 9,912.97 points.

Commodities Recap

Crude oil prices declined as increasing U.S. drilling activity and steady supplies from OPEC countries added to the global supply glut. International benchmark Brent crude was trading 0.6 percent lower at $51.42 per barrel by 0408 GMT, having hit a high of $52.62 on Thursday, its highest since Mar. 10. U.S. West Texas Intermediate crude fell 0.7 percent to $48.34 a barrel, after rising to a peak of $52.62 last week, its strongest since Mar. 10.

Gold prices rose to fresh 2-week highs as the dollar stayed on the defensive following the Federal Reserve's less hawkish-than-expected comments last week. Spot gold rallied 0.4 percent to $1,234.30 per ounce by 0414 GMT, having hit a peak of $1,234.53, the highest since March 6. U.S. gold futures were mostly unchanged at $1,230.80.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.5005 percent, while 5-year yield was at 2.020 percent.

The Australian bonds posted a sharp rebound at the start of the week as investors covered previous short positions. Also, markets are eyeing the release of the Reserve Bank of Australia’s monetary policy meeting minutes, scheduled to be released on March 21. The yield on the benchmark 10-year Treasury note slumped 5 basis points to 2.82 percent, the yield on 15-year note also plunged 5 basis points to 3.21 percent and the yield on short-term 2-year traded nearly 4 basis points lower at 1.80 percent.

The New Zealand bonds closed higher as investors wait to watch the GlobalDairyTrade price auction, scheduled to be held on later in today. Also, weak consumer sentiment has lent support to bond prices. The yield on the benchmark 10-year bond slumped 4 basis points to 3.25 percent at the time of closing, the yield on 7-year note also plunged 4 basis points to 2.82 percent while the yield on short-term 2-year note traded 2 basis points lower at 2.11 percent.


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