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Asia Roundup: Antipodeans ease as Chinese industrial production miss forecast, dollar index hits 2-week low amid lingering trade concerns, Asian shares nudge up – Tuesday, April 17th, 2018

Market Roundup

  • China Q1 GDP YY, 6.8%, 6.7% eyed, 6.8% last
     
  • China Mar Industrial Output YY, 6.0%, 6.2% eyed, 7.2% last
     
  • China Mar Retail Sales YY, 10.1%, 9.9% eyed, 9.7% last
     
  • China's property investment fastest in 3 years but sales slow
     
  • China c. bank raises interest rate on 1-year MLF
     
  • Trump says Russia, China playing 'currency devaluation game'
     
  • Trade frictions with US won't change stable development of China’s economy-stats bureau
     
  • HKMA intervenes again as Hong Kong dollar weakens, buys HK$5.77 bln in US trade
     
  • Australia inflation to stay low for some time, limit case for rate rise-RBA
     
  • Japan finance minister suspects U.S. wants bilateral FTA
     
  • IMF sees strong growth for New Zealand, flags medium-term housing risks
     
  • Global economy to grow 3.5 pct in 2018 but trade is key risk – IIF

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Mar CPI (EU Norm) Final YY, 1.1% eyed, 1.1% last
     
  • (0430 ET/0830 GMT) Great Britain Mar Claimant Count
    Change, 5.0k eyed, 9.2k last
     
  • (0430 ET/0830 GMT) Great Britain Feb ILO Unemployment Rate, 4.3% eyed, 4.3% last
     
  • (0430 ET/0830 GMT) Great Britain Feb Avg Wk Earnings 3M YY, 3.0% eyed, 2.8% last
     
  • (0500 ET/0900 GMT) Germany Apr ZEW Economic Sentiment -1.0 eyed, 5.1 last
     
  • (0500 ET/0900 GMT) Germany Apr ZEW Current Conditions 88.0 eyed, 90.7 last

Key Events Ahead

  • (0330 ET/0730 GMT) Senior officials from the German Finance Ministry discuss current economic developments ahead of the upcoming G20 meeting in Washington-Berlin
     
  • (0430 ET/0830 GMT) German Finance Minister Olaf Scholz presents the annual customs report during a news conference in Berlin, he is likely to also address other topical issues-Berlin
     
  • (0730 ET/1130 GMT) Deutsche Bundesbank board member Prof Dr Joachim Wuermeling speaks on “Cryptocurrencies and the Financial Sector” at the Conference on “Ethics and Digitalization”-Berlin
     
  • (0915 ET/1315 GMT) Federal Reserve Bank of San Francisco President John Williams speaks before the NABE-Bank of Spain International Symposium, “Global Recovery: The Good, the Bad, and the Ugly”-Madrid
     
  • (1000 ET/1400 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles testifies before the House Financial Services Committee hearing-Washington D.C.
     
  • (1100 ET/1500 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker lectures on “The Economics of Equitable Education” at Saint Joseph's University-Philidelphia
     
  • (1200 ET/1600 GMT) Deutsche Bundesbank board member Carl-Ludwig Thiele speaks on “”Between Virtuality and Virtuosity – Banks and Central Banks in the Digital Age”-Stuttgart, Germany
     
  • (1340 ET/1740 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks before a Chicago Rotary Club luncheon-Chicago
     
  • (1345 ET/1745 GMT) Deutsche Bundesbank board member Prof Dr Joachim Wuermeling speaks on “Sustainability, Security, Return – A Trilemma in Investment?” at a FAZ Conference -Frankfurt
     
  • (1400 ET/1800 GMT) Swedish Central Bank Governor Stefan Ingves participates in a panel discussion on how the digitalization of money affects the role of central banks-Washington, D.C.

FX Beat

DXY: The dollar index slumped to a 2-week low as the market's attention shifted back to U.S. trade policy as investors wagered U.S.-led attacks on Syria would not escalate into a wider conflict in the Middle East. The greenback against a basket of currencies trades 0.1 percent down at 89.37, having touched a low of 89.36 earlier, its lowest since Mar. 28. FxWirePro's Hourly Dollar Strength Index stood at -65.13 (Bearish) by 0500 GMT.

EUR/USD: The euro rose, extending gains for the third straight session, benefiting from the negative sentiment on the U.S. dollar. The selling pressure in the dollar intensified after Trump accused Russia and China of devaluing their currencies, as the rouble's fall this month was set off by U.S. sanctions while the yuan has been appreciating in recent months. The European currency traded 0.05 percent up at 1.2382, having touched a high of 1.2396 on Wednesday, its highest since Apr. 11. FxWirePro's Hourly Euro Strength Index stood at 100.24 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on the U.S. building permits, housing starts, industrial production and FOMC members' speech, as Eurozone economic data calendar remains absolutely data empty. 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 1.2353 (5-DMA), a break below could drag it lower 1.2260 (Apr. 6 Low).

USD/JPY: The dollar eased, extending previous session losses, as the United States accused Russia of blocking international inspectors from reaching the site of a suspected chemical attack in Syria. However, the likelihood that there would be no immediate military escalation in Syria following the weekend missile strikes by the United States, Britain and France, supported investor appetite. The major was trading 0.1 percent down at 107.02, having hit a high of 107.78 on Friday, its highest since Feb. 21. FxWirePro's Hourly Yen Strength Index stood at -37.61 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. building permits, housing starts, industrial production and FOMC members' speech. Immediate resistance is located at 107.90 (Feb. 21 High), a break above targets 108.50. On the downside, support is seen at 106.77 (Apr. 6 Low), a break below could take it lower 106.26 (Mar. 29 Low).

GBP/USD: Sterling rallied to its highest levels since the Brexit referendum in June 2016 on expectations of a Bank of England rate hike next month and hopes the UK may clinch a better Brexit deal than previously thought. Investors expect the BoE to raise interest rates by 25 basis points next month as it tries to curb inflation. The British pound traded 0.1 percent up at 1.4345, having hit a high of 1.4354, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 101.34 (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 1.4380, a break above could take it near 1.4420. On the downside, support is seen at 1.4231 (5-DMA), a break below targets 1.4150 (10-DMA). Against the euro, the pound was trading 0.05 percent up at 86.33 pence, having hit a high of 86.27 pence on Monday, it’s highest since July 2017.

AUD/USD: The Australian dollar eased, reversing some of its previous session gains, as China's economy grew 6.8 percent in the first quarter of 2018 from a year earlier, even as its export outlook is being clouded by escalating tensions with the United States. However, the downside was limited as minutes of the RBA’s April meeting showed its Board agreed the next move in rates was more likely to be up than down, assuming the economy gathered momentum as expected. The Aussie trades 0.1 percent down at 0.7768, having hit a high of 0.7809 on Friday; it’s highest since Mar. 15. FxWirePro's Hourly Aussie Strength Index stood at -65.11 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7752 (Previous Session Low), a break below targets 0.7725 (10-DMA). On the upside, resistance is located at 0.7810 (Apr. 13 high), a break above could take it near 0.7838 (Mar. 8 High).

NZD/USD: The New Zealand dollar declined as hopes that Chinese data might provide some momentum proved misplaced. China's economic growth and retail sales just beat estimates, while industrial output and fixed asset investment missed forecast, limiting the market reaction. The Kiwi trades 0.3 percent down at 0.7339, having touched a high of 0.7395 on Friday, its highest level since Feb. 19. FxWirePro's Hourly Kiwi Strength Index was at -162.35 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7409 (Feb. 19 High), a break above could take it near 0.7437 (Feb. 16 High). On the downside, support is seen at 0.7322 (10-DMA), a break below could drag it below 0.7275 (21-DMA).

Equities Recap

Asian shares edged up after data showed China's economy grew a little faster than expected in the first quarter, while the greenback eased to 2-week low amid lingering trade concerns.

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

Tokyo's Nikkei rose 0.05 percent to 21,838.19 points, Australia's S&P/ASX 200 index gained 0.1 percent to 5,845.60 points and South Korea's KOSPI fell 0.3 percent to 2,449.71 points.

Shanghai composite index eased 0.6 percent to 3,090.66 points, while CSI300 index was trading 0.8 percent down at 3,776.98 points.

Hong Kong’s Hang Seng was trading 0.3 percent lower at 30,233.35 points. Taiwan shares shed 1.3 percent to 10,810.45 points.

Commodities Recap

Crude oil prices rose amid worries there could be a high risk of disruptions to supply, especially in the Middle East. International benchmark Brent crude was trading 0.3 percent up at $71.67 per barrel by 0422 GMT, having hit a high of $73.05 on Wednesday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.3 percent up at $66.53 a barrel, after rising as high as $67.42 on Wednesday, its highest since Nov. 2014.

Gold prices consolidated within narrow ranges, as the U.S. dollar remained on the back foot, supported by growing worries over U.S.-China trade tensions. Spot gold was unchanged at $1,345.36 an ounce as of 0432 GMT, having hit a high of $1,365.16 an ounce on Wednesday, its highest since Jan. 25. U.S. gold futures eased 0.2 percent to $1,348.4 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.837 percent higher by 0.006 bps, while 5-year yield was 0.008 bps up at 2.615 percent.

The Japanese 10-year government bond yields slumped over 60 percent in just two months, from 0.102 to 0.04 pips and the Bank of Japan (BoJ) seems in no mood to hint at an exit plan from the current quantitative easing to keep the debt market elevated. However, as of Tuesday, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.04 percent, the yield on the long-term 30-year note nearly steadied at 0.70 percent and the yield on short-term 2-year remained flat at -0.15 percent.

The Australian government bonds slumped after the Reserve Bank of Australia (RBA) April meeting minutes confirmed the board members believe next policy move likely to be an interest rate hike. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2 basis points to 2.762 percent, the yield on the long-term 30-year Note climbed 1-1/2 basis points to 3.356 percent and the yield on short-term 2-year also surged 2-1/2 basis points to 2.123 percent.

The New Zealand government bonds ended Tuesday’s session on a tad higher note even as investors expect to see a rise in the country’s consumer price inflation (CPI)  for the first quarter of this year, scheduled to be released on April 18 by 22:45GMT. The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 2.84 percent, the yield on the long-term 20-year note also dipped 1/2 basis point to 3.43 percent and the yield on short-term 2-year too closed 1/2 basis point lower at 1.95 percent.

The Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries, as U.S. stocks climbed. The two-year fell 2 Canadian cents to yield 1.874 percent and the 10-year declined 29 Canadian cents to yield 2.278 percent. The 10-year yield touched its highest since March 21 at 2.292 percent.


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