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Asia Roundup: Aussie eases on RBA Lowe’s comments, dollar index steadies ahead of U.S. CPI data, Asian shares slump amid risk-off sentiment – Friday, August 11th, 2017

Market Roundup

  • Australia's central bank governor signals steady rates for a while yet
     
  • China should be neutral if N. Korea fires first on U.S. – Global Times
     
  • Central bank lending rules in question as NZ house prices dip, sales plummet
     
  • China Jul fiscal spending up 5.4 pct y/y, revenue up 11.1%
     
  • China Jan-Jul spending up 14.5 pct y/y, revenue up 10%
     
  • U.S. stock funds post largest withdrawals in 5 weeks -Lipper
     
  • Foreign CB US debt holdings +$2.9 bln to $3.3 tln Aug 2 week
     
  • Treasuries $2.5 bln to $3.0 tln, agencies +$116 mln to $262.4 bln
     

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Consumer Prices Final
     
  • (0400 ET/0800 GMT) Italy CPI (EU Norm) MM

Key Events Ahead

  • (0605 ET/1005 GMT) UK Stg1.5/1.5/2.0 bln for 1/3/6 months auctions

FX Beat

DXY: The dollar traded within narrow ranges against most of its major peers as investors were reluctant to take big positions ahead of U.S. consumer price index figures due later in the day. The greenback against a basket of currencies traded 0.1 percent up at 93.49, having touched a high of 93.89 on Wednesday, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 10.71 (Neutral) by 0500 GMT.

EUR/USD: The euro consolidated between a narrow range as investors remained cautious ahead of U.S. consumer price index figures and FOMC members speeches. The European currency traded flat at 1.1772, having touched a low of 1.1688 on Wednesday, its lowest since Jul. 28. FxWirePro's Hourly Euro Strength Index stood at 44.27 (Neutral) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the U.S. CPI figures and Fed official Kaplan and Kashkari's speeches. Immediate resistance is located at 1.1800, a break above targets 1.1850. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).

USD/JPY: The dollar tumbled to a 2-month low below the 108.00 handle as markets remained risk-averse amid the U.S.-North Korea tensions, benefitting safe-havens such as Japanese yen. The major was trading 0.2 percent down at 108.94, having hit a low of 108.90 earlier, its lowest since Jun 14. FxWirePro's Hourly Yen Strength Index stood at 63.81 (Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. CPI figures and Fed official Kaplan and Kashkari's speeches for further momentum. Immediate resistance is located at 109.46 (78.6% retracement of 112.19 and 108.90), a break above targets 110.19 (61.8% retracement of 112.19 and 108.90). On the downside, support is seen at 108.80 (June 14 Low), a break below could take it near 108.13 (April 17 Low).

GBP/USD: Sterling steadied after falling to a 3-week low in the previous session on the back of weaker than expected construction output and readings showing Britain's external trade gap expanding further despite the weakening of the pound over the past year. The major traded flat at 1.2982, having hit a low of 1.2952 on Wednesday, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at 7.12 (Neutral) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3062 (21-DMA), a break above could take it near 1.3094 (10-DMA). On the downside, support is seen at 1.2932 (July 20 Low), a break below targets 1.2893 (July 5 Low). Against the euro, the pound was trading flat at 90.37 pence, having hit a 10-month low of 90.87 on Tuesday.

AUD/USD: The Australian dollar slumped, extending losses for the ninth consecutive session as the RBA Governor Phillip Lowe’s comments indicated the central banks' readiness to intervene in the FX markets. Moreover, escalating tensions over North Korea and weaker commodity prices continued to support safe-haven assets. The Aussie trades 0.1 percent down at 0.7861, having hit a low of 0.7839 earlier, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at -51.82 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7830, a break below targets 0.7800. On the upside, resistance is located at 0.7902 (5-DMA), a break above could take it near 0.7938 (10-DMA).

NZD/USD: The New Zealand dollar rebounded after falling to a 1-month low in the prior session following Reserve Bank New Zealand's comments, citing that they were becoming more uncomfortable with the strength of the local currency. The Kiwi trades 0.1 percent up at 0.7284, having touched a low of 0.7251, its lowest level since July 13. FxWirePro's Hourly Kiwi Strength Index was at -57.16 (Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7318 (78.6% retracement of 0.7558 and 0.7251), a break above could take it near 0.7343 (5-DMA). On the downside, support is seen at 0.7250, a break below could drag it till 0.7200.

Equities Recap

Asian shares extended losses as escalating tensions between the United States and North Korea sent investors seeking safety into less risky assets such the yen, the Swiss franc, and Treasuries.

MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 1.4 percent to a near one-month low, and was on track for a 2.1 percent drop for the week.

Australia's S&P/ASX 200 index eased 1.2 percent to 5,693.10 points and South Korea's KOSPI slumped 1.7 percent to 2,319.71 points.

Shanghai composite index fell 1.8 percent to 3,202.46 points, while CSI300 index was trading 1.9 percent down at 3,645.73 points.

Hong Kong’s Hang Seng was trading 1.9 percent lower at 26,902.61 points. Taiwan shares shed 0.01 percent to 10,329.57 points.

Commodities Recap

Crude oil prices declined, weighed down by persistent worries about oversupply despite a bigger-than-expected drawdown in U.S. crude inventories. International benchmark Brent crude was trading 0.7 percent down at $51.48 per barrel by 0431 GMT, having hit a high of $53.63 the day before, its strongest since May 25. U.S. West Texas Intermediate was trading 0.8 percent down at $48.12 a barrel, after rising as high as $50.20 the prior session, its strongest since May 25.

Gold prices rose, hitting fresh 2-month highs and were set for a fourth consecutive day of gains as rising tensions between the United States and North Korea stoked safe-haven buying. Spot gold was 0.05 percent up at $1,285.73 per ounce at 0436 GMT, having touched a high of $1,288.86 an ounce earlier in the session, it highest level since June 8. U.S. gold futures for December delivery rose 0.3 percent to $1,294.10 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.204 percent lower by 0.007 bps, while 5-year yield was 0.007 bps down at 1.774 percent.

The Australian bonds made a solid comeback on the last trading day of the week, tracking highs in the U.S. counterpart, after tensions re-ignited between the US and North Korea, that revamped demand for safe-haven assets. The yield on the benchmark 10-year Treasury note slumped to its lowest in more than a month, by nearly 7 basis points to 2.59 percent, the yield on 15-year note plunged 7-1/2 basis points to 2.89 percent and the yield on short-term 2-year traded nearly 5 basis points down at 1.77 percent.

The New Zealand 10-year bond yields closed Friday’s session at over 6-week low, tracking a similar trend in the overnight performance of the U.S. Treasuries after economic data, highlighting the initial jobless claims as well as producer price index disappointed markets, surprisingly. At the time of closing, the yield on the benchmark 10-year Treasury note slumped 4 basis points to 2.81 percent, the yield on 7-year note also plunged 4 basis points to 2.67 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.02 percent.

The Canadian government bond prices were higher across the yield curve, with the benchmark 10-year bond rising 46 Canadian cents to yield 1.853 percent and the two- year adding 3.5 Canadian cents to yield 1.223 percent.


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