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Asia Roundup: Kiwi hits 1-1/2 month peak on RBNZ McDermott's comments, dollar index steadies near 2-week trough amid Syria tensions, Asian shares slump – Thursday, April 12th, 2018 

Market Roundup

  • China commerce ministry says Beijing will fight back if U.S. escalates trade spat
     
  • Trump signals strikes against Syria, lays into Assad ally Russia
     
  • BoJ Gov Kuroda – Pledges to maintain massive stimulus, economy expanding
     
  • BoJ Maeda – Steady progress towards 2% CPI target, will remain ultra-easy.
     
  • Great Britain March RICS Housing Survey 0, 2 eyed, 0 last
     
  • UK business lobby says economy “treading water” since the start of the year
     
  • World Bank raises 2018 East Asia growth forecast, says tighter policy likely needed
     
  • House Speaker Ryan to quit, shaking Republicans as U.S. elections near
     
  • Facebook's Zuckerberg unscathed by congressional grilling, stock rises
     

Economic Data Ahead

  • (0500 ET/0900 GMT) EZ Feb Industrial Production YY 3.8% eyed, 2.7% last

Key Events Ahead

  • (0330 ET/0730 GMT) Norges Bank Governor Oystein Olsen and Deputy Governor Egil Matsen speak to the Regional network, Region South-West and lecture at the University of Stavanger-Stavanger, Norway
     
  • (0730 ET/1130 GMT) The European Central Bank publishes the accounts of the policy meeting of the Governing Council held on March 7-8-Frankfurt
     
  • (0815 ET/1215 GMT) ECB Executive Board member Benoit Coeure participates in a panel discussion at a conference 'La France et l’Europe dans la mondialisation'-Paris
     
  • (0815 ET/1215 GMT) Vice President of the Bundesbank Prof. Dr. Claudia Maria Buch participates in a Bundesbank Panel discussion at CEPII 40th Anniversary-Paris
     
  • (1100 ET/1500 GMT) Bundesbank speech by Executive Board of the Deutsche Bundesbank Dr. Andreas Dombret on “Where is the Banking Union heading?”-Munich
     
  • (1130 ET/1530 GMT) Deputy Governor of Norges Bank Jon Nicolaisen speaks at the Norwegian Academy Of Science And Letters-Oslo
     
  • (1215 ET/1615 GMT) Jens Weidmann, Germany's respresentative on the ECB Governing Council, lectures about the euro zone's currency union-Berlin
     
  • (1255 ET/1655 GMT) ECB Vice President Vitor Constancio participates in the evening event hosted by the Systemic Risk Council, CFA Institute and CFA Society Belgium-Brussels
     
  • (1700 ET/2100 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a Q&A moderated by the Associated General Contractors of Minnesota-Minneapolis, Minnesota
     

FX Beat

DXY: The dollar index consolidated near 2-week lows hit in the previous session, amid escalating Middle East tensions over Syria, with the US-Russia on the edge of a war. The greenback against a basket of currencies trades flat at 89.54, having touched a low of 89.36 on Wednesday, its highest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -17.97 (Neutral) by 0500 GMT.

EUR/USD: The euro eased after rising to a 2-week peak in the prior session on the back of comments from European Central Bank officials, reinforcing views that the central bank is on track to normalise monetary policy. The European currency traded 0.1 percent down at 1.2358, having touched a high of 1.2395 on Tuesday, its highest since Mar. 28. FxWirePro's Hourly Euro Strength Index stood at 75.34 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on ECB monetary policy meeting, industrial production and ECB Coeure’s speech, ahead of the U.S. unemployment benefit claims, import/export price index and FOMC member Kashkari speech. Immediate resistance is located at 1.2421 (Mar. 28 High), a break above targets 1.2476 (Mar. 27 High). On the downside, support is seen at 1.2320 (21-DMA), a break below could drag it lower 1.2260 (Apr. 6 Low).

USD/JPY: The dollar rose, reversing some of its previous session losses, as minutes from the Federal Reserve's last policy meeting raised expectations of a faster pace of U.S. rate hikes. However, concerns over the possibility of Western military action against Syria limited gains. The major was trading 0.2 percent up at 106.93, having hit a high of 107.49 last week, its highest since Mar. 28. FxWirePro's Hourly Yen Strength Index stood at -33.73 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, import/export price index and FOMC member Kashkari speech. Immediate resistance is located at 107.46 (Apr. 6 High), a break above targets 107.90 (Feb. 21 High). On the downside, support is seen at 106.27 (21-DMA), a break below could take it lower 105.99 (Apr. 4 Low).

GBP/USD: Sterling steadied after rising to a 2-week peak the day before on the back of growing expectations of BoE interest rate increase next month and a recent agreement on a transition deal for when Britain quits the EU next year. On Wednesday, sterling trade-weighted index published by the Bank of England rallied to its highest level since June 30, 2016, a week after the Brexit referendum. The major traded 0.05 percent up at 1.4180, having hit a high of 1.4223 the day before, it’s highest since Mar. 27. FxWirePro's Hourly Sterling Strength Index stood at 76.30 (Slightly Bullish) by 0400 GMT. Investors’ focus will remain on the Monetary Policy Committee (MPC) Member Broadbent's speech, the Bank of England (BoE) Credit Conditions Survey results and a scheduled speech from the BoE's head Mark Carney, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4200 (Mar. 28 High), a break above could take it near 1.4244 (Mar. 27 High). On the downside, support is seen at 1.4113 (5-DMA), a break below targets 1.4070 (21-DMA). Against the euro, the pound was trading 0.1 percent up at 87.15 pence, having hit a high of 86.92 pence on Tuesday, it’s highest since Mar 22.

AUD/USD: The Australian dollar eased, extending previous session losses as domestic economic data struggled to meet expectations. Australia’s inflation expectations slightly edged down to 3.6 percent from the previous 3.7 percent, while Investment Lending for Homes only rose by 0.5 percent, a decline from the previous 1.1 percent. The Aussie trades 0.05 percent down at 0.7747, having hit a high of 0.7772 the day before; it’s highest since Mar. 22. FxWirePro's Hourly Aussie Strength Index stood at 37.28 (Neutral) by 0500 GMT.  Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7711 (5-DMA), a break below targets 0.7693 (Apr. 10 Low). On the upside, resistance is located at 0.7780 (Mar. 21 high), a break above could take it near 0.7804 (Mar. 16 High).

NZD/USD: The New Zealand dollar rallied to a fresh 1-1/2 month high after Reserve Bank of New Zealand's Assistant Governor John McDermott stated that the central bank's addition of an employment goal mandate would support its flexible inflation targeting. However, negative reaction by the allies within the UN to a chemical weapons attack over the weekend limited the upside. The Kiwi trades 0.3 percent up at 0.7377, having touched a high of 0.7378, its highest level since Feb. 21. FxWirePro's Hourly Kiwi Strength Index was at 30.11 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7386 (Feb. 21 High), a break above could take it near 0.7411 (Feb. 15 High). On the downside, support is seen at 0.7314 (5-DMA), a break below could drag it below 0.7262 (21-DMA).

Equities Recap

Asian shares slumped, while greenback consolidated near 2-week lows as the threat of imminent U.S. military action in Syria rattled investor risk sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.4 percent.

Tokyo's Nikkei declined 0.1 percent to 21,660.28 points, Australia's S&P/ASX 200 index declined 0.2 percent to 5,815.50 points and South Korea's KOSPI fell 0.1 percent to 2,442.71 points.

Shanghai composite index eased 0.9 percent to 3,180.16 points, while CSI300 index was trading 1.01 percent down at 3,898.64 points.

Hong Kong’s Hang Seng was trading 0.6 percent lower at 30,699.86 points. Taiwan shares shed 0.2 percent to 10,955.29 points.

Commodities Recap

Crude oil prices steadied after rising to a multi-year peak in the previous session, amid concerns over a military escalation in Syria and rising American supplies. International benchmark Brent crude was trading 0.5 percent up at $72.25 per barrel by 0433 GMT, having hit a high of $73.05 on Wednesday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.6 percent down at $67.07 a barrel, after rising as high as $67.42 on Wednesday, its highest since Nov. 2014.

Gold prices declined after rising to multi-week highs in the prior session, as minutes from the Federal Reserve's last policy meeting raised expectations of a faster pace of U.S. rate hikes. Spot gold was down 0.2 percent at $1,349.42 an ounce by 0438 GMT, having hit a high of $1,365.01 an ounce, its highest since Jan. 25. U.S. gold futures fell 0.4 percent to $1,354.5 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.777 percent lower by 0.013 bps, while 5-year yield was 0.01 bps down at 2.609 percent.

The Australian short-term government bonds edged slightly lower as markets trade in a range-bound, as investors are still nervous about global trade tensions. Also, the traders will now focus on the Reserve Bank of Australia’s (RBA) financial stability report. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, traded flat at 2.685 percent, the yield on the long-term 30-year Note dipped nearly 1 basis point to 3.266 percent and the yield on short-term 2-year also rose nearly 1 basis point to 2.050 percent.

The Japanese government bonds remained flat as investors traded sideways, following balanced comments from the Bank of Japan’s Governor Haruhiko Kuroda on the country’s economic growth as well as inflation. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.03 percent, the yield on the long-term 30-year note slipped 1 basis point to 0.71 percent and the yield on short-term 2-year remained flat at -0.15 percent.


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