News

Asia Roundup: Antipodeans gain on improving risk sentiment, dollar index off 2-week peak ahead of U.S. inflation report, Asian shares rebound – Monday, February 12th, 2018

Market Roundup

  • Pence raises prospect of U.S. talks with North Korea – Washington Post
     
  • Trump budget asks more than $200 billion for infrastructure, border security -budget director
     
  • Seoul seeks communication, lower military tension ahead of possible N. Korea summit
     
  • Merkel defends painful coalition concessions, denies authority waning
     
  • British PM May to set out 'Road to Brexit' in speech
     
  • Bank of England chief economist says “no rush” to raise rates
     
  • UK consumer spending stays in the doldrums in January – Visa
     
  • Australia's big banks focus on job cuts as inquiry looms
     
  • S. African President Zuma's fate to be decided on Monday says ANC head

Economic Data Ahead

  • No major economic data release

Key Events Ahead

  • (0505 ET/1005 GMT) Italy E6.5 bln for 12-month auction
     
  • (0530 ET/1030 GMT) Germany E3.0 bln for 6-month auction
     
  • (0855 ET/1355 GMT) France E2.9-3.3/E1.1-1.5/E0.9-1.3 for 3/6/12 month auction

FX Beat

DXY: The dollar index eased after rising to a 2-week peak in the previous week, as investors braced for more volatile ahead of U.S. inflation figures later in the week.  The greenback against a basket of currencies traded 0.2 percent down at 90.16, having touched a high of 90.57 on Thursday, its highest since Jan. 23. FxWirePro's Hourly Dollar Strength Index stood at -41.65 (Neutral) by 0500 GMT.

EUR/USD: The euro rebounded after falling to a 3-week low in the previous session, on expectations of the European Central Bank unwinding monetary stimulus. The European currency traded 0.3 percent up at 1.2283, having touched a low of 1.2205 on Friday, its lowest since Jan. 18. FxWirePro's Hourly Euro Strength Index stood at -77.14 (Slightly Bearish) by 0500 GMT.  Investors’ attention will remain on U.S. monthly budget statement, amid a lack of economic data from Eurozone docket. Immediate resistance is located at 1.2328 (61.8% retracement of 1.2522 and 1.2205), a break above targets 1.2365 (10-DMA). On the downside, support is seen at 1.2205 (Previous Session Low), a break below could drag it lower 1.2165.

USD/JPY: The dollar declined against the Japanese yen on reports released late last week that the Japanese government had decided to nominate Haruhiko Kuroda for a rare second term as Bank of Japan governor when his current one ends in April, signaling the BoJ's ultra-loose monetary policy will remain in place. The major was trading 0.1 percent down at 108.66, having hit a low of 108.04 on Friday, its lowest since Sept. 8. FxWirePro's Hourly Yen Strength Index stood at 148.87 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. monthly budget statement for further momentum. Immediate resistance is located at 109.37 (61.8% retracement of 111.48 and 108.04), a break above targets 110.28. On the downside, support is seen at 108.00, a break below could take it lower 107.30.

GBP/USD: Sterling rose after declining to a 3-week trough in the prior session on European Union's Michel Barnier comments, citing that Britain had substantial objections to the EU's transition offer and that parts of it were not up for negotiation. The major traded 0.3 percent up at 1.3865, having hit a low of 1.3764 on Friday, it’s lowest since Jan 17. FxWirePro's Hourly Sterling Strength Index stood at -75.10 (Slightly Bearish) by 0500 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 1.3958 (21-DMA), a break above could take it near 1.4063. On the downside, support is seen at 1.3764 (Previous Session Low), a break below targets 1.3700. Against the euro, the pound was trading 0.1 percent down at 88.61 pence, having hit a low of 89.10 pence on Tuesday, it’s lowest since Jan. 17.

AUD/USD: The Australian dollar extended its previous session's rebound from a more than one-month trough as a bounce back in equity markets restored risk appetite. The Aussie trades 0.2 percent up at 0.7803, having hit a low of 0.7758 on Friday; it’s lowest since Dec. 27. FxWirePro's Hourly Aussie Strength Index stood at 36.51 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7758 (Previous Session Low), a break below targets 0.7705. On the upside, resistance is located at 0.7874, a break above could take it near 0.7954.

NZD/USD: The New Zealand dollar advanced, extending previous session gains, ahead of RBNZ’s survey of inflation expectations for the first quarter, which could drive the major lower if they showed inflation expectations had dropped after a weaker outcome for the consumer price index last quarter. The Kiwi trades 0.1 percent up at 0.7261, having touched a low of 0.7176 on Thursday, its lowest level since Jan. 10. FxWirePro's Hourly Kiwi Strength Index was at 109.32 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7303 (10-DMA), a break above could take it near 0.7350. On the downside, support is seen at 0.7176 (Feb. 8 Low), a break below could drag it near 0.7100.

Equities Recap

Asian shares rebounded as S&P futures extended their bounce, while the greenback eased from a 2-week peak hit in the previous session, as investors awaited the U.S. inflation figures later in the week.

MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.8 percent.

Australia's S&P/ASX 200 index lost 0.3 percent to 5,820.00 points and South Korea's KOSPI advanced 1.3 percent to 2,393.27 points.

Shanghai composite index rose 0.9 percent to 3,160.83 points, while CSI300 index was trading 1.5 percent up at 3,900.17 points.

Hong Kong’s Hang Seng was trading 0.7 percent higher at 29,726.06 points. Taiwan shares added 0.5 percent to 10,421.09 points.

Commodities Recap

Crude oil prices rose by 1 percent, recovering some of last week's steep losses as rising production in the United States undermined efforts led by the Organization of the Petroleum Exporting Countries and Russia to tighten markets and prop up prices. International benchmark Brent crude was trading 0.9 percent up at $63.31 per barrel by 0509 GMT, having hit a low of $61.75 the session before, its lowest since Dec. 7. U.S. West Texas Intermediate was trading 1.05 percent up at $59.81 a barrel, after falling as low as $58.06 on Friday, its weakest since Dec. 22.

Gold prices edged up as the greenback eased, while investors awaited more data on U.S. inflation amid expectations of rising interest rates. Spot gold was 0.5 percent up at $1,323.14 an ounce, as of 0520 GMT, having hit a low of 1,306.96 on Thursday, lowest since Jan 14. U.S. gold futures were up 0.5 percent at $1,321.70 per ounce on Monday.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.856 percent higher by 0.026 bps, while 5-year yield was 0.027 bps up at 2.543 percent.

The Australian bonds jumped during early Asian session at the start of the week, tracking similar movement in the U.S. counterpart as investors wait to watch the former’s employment report for the month of January. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped nearly 4 basis points to 2.88 percent, the yield on the long-term 30-year note surged 4-1/2 basis points to 3.47 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points higher at 2.02 percent.

The New Zealand government bonds closed Monday’s session on a higher note amid a muted trading week that is scheduled to witness data of least economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 3.01 percent, the yield on 20-year also fell 1 basis point to 3.52 percent and the yield on short-term 2-year too close a basis point lower at 1.89 percent.


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