News

Asia Roundup: Antipodeans hit multi-week peaks, dollar index at 3-week lows on slower-than-expected U.S. wage growth, Asian shares surge – Monday, July 9th, 2018

Market Roundup

  • No “reluctant conscript”, Brexit minister quits in blow to Britain's May
     
  • After Pyongyang put-down, Pompeo stands by 'difficult' denuclearization talks
     
  • Pain and pressure – market turmoil pushes some China funds to the brink
     
  • China Jun FX Reserves (monthly), 3.112 trln, 3.100 trln f'cast, 3.111 trln last
     
  • Japan May Current Account NSA (JPY), 1,938.3 bln, 1,240.2 bln f'cast, 1,845.1 bln last
     
  • Erdogan assumes new presidential powers, tightening control over Turkey
     
  • UK businesses perk up a little but caution reigns -BCC

Economic Data Ahead

  • (0430 ET/0830 GMT) EU Jul Sentix Index, 8.2 f'cast, 9.3 last

Key Events Ahead

  • (0300 ET/0700 GMT) ECB Chief Economist Peter Praet gives introductory remarks at the ECB Central Banking Seminar in Frankfurt, Germany
     
  • (0910 ET/1310 GMT) Minneapolis Fed President Neel Kashkari makes welcoming remarks
     
  • (0900 ET/1300 GMT) ECB president Mario Draghi speaks to the European Parliament's ECON committee in Brussels

FX Beat

DXY: The dollar index tumbled as U.S. wages did not increase substantially, slashing expectations the Federal Reserve would hike interest rates a total of four times this year. The greenback against a basket of currencies trades 0.1 percent down at 93.84, having touched a low of 93.78 earlier, its lowest since June 14. FxWirePro's Hourly Dollar Strength Index stood at -83.03 (Slightly Bearish) by 0500 GMT.

EUR/USD: The euro rose, extending gains for the third straight session, as the dollar consolidated near 3-1/2-week lows against its major competitors after U.S. jobs data showed slower-than-expected wage growth. The European currency traded 0.2 percent up at 1.1759, having touched a high of 1.1767 the session before, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 52.22 (Bullish) by 0500 GMT. Investors’ attention will remain on Eurozone sentix investor confidence, ahead of U.S. consumer credit change and FOMC member Kashkari speech. Immediate resistance is located at 1.1801 (June 13 High), a break above targets 1.1852 (June 14 High). On the downside, support is seen at 1.1680 (July 6 Low), a break below could drag it till 1.1630 (July 4 Low)

USD/JPY: The dollar consolidated within narrow ranges as an increase in the U.S. unemployment rate and slower wage growth indicated moderate inflation pressures that dented expectations that the Federal Reserve would raise interest rates a total of four times in 2018. The major was trading flat at 110.47, having hit a low of 110.28 on Wednesday, its lowest since June 28. FxWirePro's Hourly Yen Strength Index stood at -20.02 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S consumer credit change and FOMC member Kashkari speech. Immediate resistance is located at 111.08 (June 18 High), a break above targets 111.39 (May 21 High). On the downside, support is seen at 110.28 (July 4 Low), a break below could take it lower 109.68 (June 27 Low).

GBP/USD: Sterling rallied to an over 3-week high after Steve Baker, a key minister within Britain's Brexit department resigned following Brexit Secretary David Davis resignation. The major traded 0.2 percent up at 1.3313, having hit a high of 1.3318 earlier; it’s highest since June 12. FxWirePro's Hourly Sterling Strength Index stood at 35.83 (Neutral) 0500 GMT. Investors’ attention will remain on BoE MPC member Broadbent's speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3362 (June 1 High), a break above could take it near 1.3389 (June 13 High). On the downside, support is seen at 1.3243 (21-DMA), a break below targets 1.3200. Against the euro, the pound was trading 0.05 percent down at 88.40 pence, having hit a high of 87.99 pence on Wednesday, it’s highest since June 27.

AUD/USD: The Australian dollar rose to a 3-week peak as the greenback eased against a basket of currencies, while investors feared an ongoing tariff war between the United States and China could derail global growth. The Aussie trades 0.6 percent up at 0.7468, having hit a high of 0.7472 earlier; it’s highest since June 15. FxWirePro's Hourly Aussie Strength Index stood at 89.87 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7383 (5-DMA), a break below targets 0.7355. On the upside, resistance is located at  0.7480 (June 15 High), a break above could take it near 0.7500.

NZD/USD: The New Zealand dollar rose as the greenback struggled after U.S. jobs data released on Friday showed a slower-than-expected growth in wages, suggesting the Federal Reserve may go slow on future rate hikes. The Kiwi trades 0.1 percent up at 0.6846, having touched a high of 0.6850 earlier, its highest level since June 27. FxWirePro's Hourly Kiwi Strength Index was at 83.80 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6859, a break above could take it near 0.6920. On the downside, support is seen at 0.6736 (June 29 Low), a break below could drag it below 0.6700.

Equities Recap

Asian shares surged, while the greenback against a basket of currencies eased as the 10-year Treasury yield consolidated near its lowest level in nearly six weeks.

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

Tokyo's Nikkei rallied 1.2 percent to 22,052.18 points, Australia's S&P/ASX 200 index gained 0.2 percent to 6,286.00 points, and South Korea's KOSPI surged 0.6 percent to 2,285.80 points.

Shanghai composite index rose 2.4 percent to 2,811.99 points, while CSI300 index was trading 2.7 percent up at 3,456.28 points.

Hong Kong’s Hang Seng was trading 1.6 percent higher at 28,783.80 points. Taiwan shares added 1.05 percent to 10,720.28 points.

Commodities Recap

Crude oil prices rose as investors focused on tight market conditions after data late last week showed U.S. crude inventories declined to their lowest in more than 3 years. International benchmark Brent crude was trading 0.4 percent up at $77.38 per barrel by 0512 GMT, having hit a low of $76.35 on Friday, its lowest since June 27. U.S. West Texas Intermediate was trading 0.2 percent higher at $74.08 a barrel, after rising as high as $75.24 on Tuesday, its highest since Nov. 2014.

Gold prices edged up as the dollar hovered close to a 3-1/2-week low after U.S. jobs data showed an increase in the unemployment rate and slower wage growth. Spot gold was 0.4 percent higher at $1,259.26 an ounce at 0520 GMT, having touched a low of $1237.82 on Tuesday, its lowest since Dec. 12. U.S. gold futures for August delivery were up 0.1 percent at $1,257.60 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.845 percent higher by 0.013 bps, while 5-year yield was 0.017 bps up at 2.739 percent.

The Australian government bond futures gained, with the three-year bond contract up 1 tick at 97.925. The 10-year contract inched up 2 ticks to 97.385.

The New Zealand government bonds were largely flat, though yields were 1.8 basis points lower towards the shorter end of the curve.


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