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Asia Roundup: Aussie hits 3-week peak on RBA's Financial Stability Report, dollar index rebounds on easing geopolitical tensions and Fed rate hike expectations, Asian shares bounce – Friday, April 13th, 2018

Market Roundup

  • Trump says would only join TPP if deal were substantially better than offered to Obama
     
  • China Mar Exports -2.7% YY, 10% eyed, 44.5% last
     
  • China Mar Imports 14.4% YY, 10% eyed, 6.3% last
     
  • China Mar Trade Balance USD -4.98 bln, 27.2 bln eyed, 33.74 bln last
     
  • Japan's Aso says he would welcome U.S. taking fresh look at TPP
     
  • EU, Britain to start trade talks next week
     
  • Trump weighs Syria options, Russia envoy says he 'cannot exclude' war
     
  • HKMA steps in as Hong Kong dollar hits weak end of trading band
     
  • Foreign CB US debt holdings +$ 12,380 bln to $3.450 tln Apr 11 week
     
  • Treasuries $12,627 bln to $3.096 tln, agencies +$184 mln to $273.921 bln
     
  • U.S. fund investors up stock exposure; first time in four weeks -Lipper
     

Economic Data Ahead
 

  • (0200 ET/0600 GMT) Germany Mar CPI Final YY 1.6% eyed, 1.6% last
     
  • (0200 ET/0600 GMT) Germany Mar HICP Final YY 1.5% eyed, 1.5% last
     
  • (0500 ET/0900 GMT) EZ Feb Eurostat Trade NSA, Eur 3.3 bln last
     

Key Events Ahead

  • (0200 ET/0600 GMT) Swedish c. bank deputy governor Martin Floden talks about Riksbank's balance sheet-Stockholm
     
  • (0630 ET/1030 GMT) Norges Bank Governor Oystein Olsen and Deputy Governor Egil Matsen give speeches to the Regional network, Region North, and in Tromso-Tromso, Norway
     
  • (0700 ET/1100 GMT) ECB President Mario Draghi talks to the winners of the Generation Euro Students' Award-Frankfurt
     
  • (0730 ET/1130 GMT) Federal Reserve Bank of Boston President Eric Rosengren speaks before the Greater Boston Chamber Economic Outlook Breakfast-Boston
     
  • (0900 ET/1300 GMT) Federal Reserve Bank of St. Louis President James Bullard makes a presentation on “Living Standards across U.S. Metropolitan Statistical Areas” at Washington University-St. Louis
     
  • (1300 ET/1700 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated Q&A session before an Odessa Chamber of Commerce Member Luncheon-Odessa, Texas
     

FX Beat

DXY: The dollar index steadied after rebounding from a 2-week trough hit earlier in the week as geopolitical worries eased on U.S. President Donald Trump's suggestion that a military strike on Syria may not be imminent. The greenback against a basket of currencies trades flat at 89.79, having touched a low of 89.36 on Wednesday, its highest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -14.35 (Neutral) by 0400 GMT.

EUR/USD: The euro steadied after falling to a 3-day low in the previous session, supported by comments from European Central bank policymakers that reinforced expectations towards monetary policy normalisation. However, the upside in the major appeared limited as the ECB minutes released on Thursday were dovish as the members broadly agreed that there is not enough evidence that the inflation is sustained. The European currency traded 0.05 percent up at 1.2328, having touched a high of 1.2395 on Tuesday, its highest since Mar. 28. FxWirePro's Hourly Euro Strength Index stood at -33.29 (Neutral) by 0400 GMT. Investors’ attention will remain on German consumer price index and Eurozone trade balance, ahead of the Fed Rosengren, Bullard and Kaplan's speech. Immediate resistance is located at 1.2345 (Apr. 2 High), a break above targets 1.2421 (Mar. 28 High). On the downside, support is seen at 1.2306 (10-DMA), a break below could drag it lower 1.2260 (Apr. 6 Low).

USD/JPY: The dollar rallied to a 1-week peak after data showed that the U.S. annualized core inflation rose at 2.1 percent, above the Fed’s target set at 2 percent, bolstering speculation of three rate hikes this year. The major was also supported by easing geopolitical worries after U.S. President Donald Trump's suggestion that a military strike on Syria may not be imminent. The major was trading 0.1 percent up at 107.36, having hit a high of 107.48 earlier, its highest since Apr. 5. FxWirePro's Hourly Yen Strength Index stood at -109.85 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Fed Rosengren, Bullard and Kaplan's speech. Immediate resistance is located at 107.67 (Feb. 27 High), a break above targets 107.90 (Feb. 21 High). On the downside, support is seen at 106.98 (5-DMA), a break below could take it lower 106.32 (21-DMA).

GBP/USD: Sterling rose to a 1-1/2 month high against the dollar and to a 9-month high against the euro after European Central Bank policymakers expressed concern about the impact of a trade war with the United States. Speculation that the Bank of England would raise rates next month as it tries to curb inflation also supported the bid tone around the major. The British pound traded 0.05 percent up at 1.4232, having hit a high of 1.4246 the day before, it’s highest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 100.62 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers and Fed official speeches, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.4278 (Feb. 2 High), a break above could take it near 1.4345 (Jan. 1 High). On the downside, support is seen at 1.4158 (5-DMA), a break below targets 1.4099 (10-DMA). Against the euro, the pound was trading 0.05 percent up at 86.62 pence, having hit a high of 86.44 pence on Thursday, it’s highest since July 2017. 

AUD/USD: The Australian dollar advanced to a 3-week peak after the Reserve Bank of Australia Financial Stability Report (FSR) released earlier stated that the risks from high-household debt and aggressive bank lending practices has slightly abated of late. However, the central bank warned about the prevailing dangers. The Aussie trades 0.3 percent up at 0.7770, having hit a high of 0.7777 earlier; it’s highest since Mar. 22. FxWirePro's Hourly Aussie Strength Index stood at 98.39 (Slightly Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7725 (5-DMA), a break below targets 0.7693 (Apr. 10 Low). On the upside, resistance is located at 0.7804 (Mar. 16 high), a break above could take it near 0.7838 (Mar. 8 High).

NZD/USD: The New Zealand dollar steadied after surging near a 2-month high in the previous session, despite data showing the Bank of New Zealand PMI came in at 52.2 versus the previous figure of 53.3, revised from 53.4. The Kiwi trades 0.05 percent up at 0.7377, having touched a high of 0.7389, its highest level since Feb. 21. FxWirePro's Hourly Kiwi Strength Index was at 14.15 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7409 (Feb. 19 High), a break above could take it near 0.7437 (Feb. 16 High). On the downside, support is seen at 0.7334 (5-DMA), a break below could drag it below 0.7296 (10-DMA).

Equities Recap

Asian shares nudged up, while the dollar rallied to a 1-week peak against the yen after U.S. President Donald Trump backtracked on his suggestion of an imminent missile attack on Syria.

MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.1 percent.

Tokyo's Nikkei rose 0.7 percent to 21,806.19 points, Australia's S&P/ASX 200 index gained 0.3 percent to 5,833.20 points and South Korea's KOSPI surged 0.5 percent to 2,455.86 points.

Shanghai composite index eased 0.2 percent to 3,173.30 points, while CSI300 index was trading 0.2 percent down at 3,891.99 points.

Hong Kong’s Hang Seng was trading 0.1 percent higher at 30,860.35 points. Taiwan shares added 0.1 percent to 10,968.42 points.

Commodities Recap

Crude oil prices declined after rising to a more than 3-year high earlier in the week, but are poised for their biggest weekly gains since last July amid tensions over Syria and falling global oil inventories. International benchmark Brent crude was trading 0.4 percent up at $71.79 per barrel by 0355 GMT, having hit a high of $73.05 on Wednesday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.4 percent down at $66.42 a barrel, after rising as high as $67.42 on Wednesday, its highest since Nov. 2014.

Gold prices rose after posting its biggest percentage fall in over two weeks in the previous session, and were on course to post a small gain for a second week amid tensions over Syria and U.S.-China trade. Spot gold gained 0.5 percent to $1,340.09 an ounce as of 0357 GMT, having hit a high of $1,365.01 an ounce on Wednesday, its highest since Jan. 25.and was set for a weekly gain of 0.3 percent. U.S. gold futures fell 0.2 percent to $1,339.90 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.823 percent lower by 0.011 bps, while 5-year yield was 0.014 bps down at 2.657 percent.

The Japanese government bonds edged slightly lower as investors booked profits on the last trading day of the week, besides, shrugging-off the dovish comments from the Bank of Japan’s Governor Haruhiko Kuroda. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.03 percent, the yield on the long-term 30-year note hovered around 0.70 percent and the yield on short-term 2-year remained tad lower at -0.15 percent.

The Australian bonds slumped on the last trading day of the week Friday after the Reserve Bank of Australia (RBA) in its April Financial Stability Report cited that the risks from household debt have subsided. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.721 percent (hits 1-week high), the yield on the long-term 30-year Note climbed 4 basis points to 3.311 percent and the yield on short-term 2-year also surged 3 basis points to 2.071 percent.

The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries as demand for safe-haven assets faded. The two-year fell 7.5 Canadian cents to yield 1.898 percent and the 10-year declined 63 Canadian cents to yield 2.285 percent, its highest since March 21.


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