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Asia Roundup: Aussies eases despite upbeat business conditions, dollar index gains as U.S. Treasury yields resume rise, Asian shares rally – Tuesday, July 10th, 2018

Market Roundup

  • Trump picks conservative judge Kavanaugh for U.S. Supreme Court
     
  • Eurosceptic British ministers quit in blow to May's Brexit plan
     
  • With raft of deals, China and Germany swear to keep trade free
     
  • Turkey's Erdogan sworn in with new powers, names son-in-law finance minister
     
  • China Jun PPI YY, 4.7%, 4.5% f'cast, 4.1% last
     
  • China Jun CPI YY, 1.9%, 1.9% f'cast, 1.8% last
     
  • Australia Jun NAB Business conditions, 15, 15 last
     
  • Australia Jun NAB Business confidence, 6, 6 last
     

Economic Data Ahead

  • (0430 ET/0830 GMT) Great Britain May Industrial Output, 0.5% m/m, 1.9% y/y f'cast; -0.8%, 1.8% last
     
  • (0430 ET/0830 GMT) Great Britain May Manufacturing Output, 0.9% m/m, 1.9% y/y f'cast; -1.4%, 1.4% last
     
  • (0430 ET/0830 GMT) Great Britain May Goods Trade Balance Non-EU, -3.70 bln f'cast, -5.37 bln last
     
  • (0430 ET/0830 GMT) Great Britain May Goods Trade Balance (GBP), -12.00 bln f'cast, -14.04 bln last
     
  • (0500 ET/0900 GMT) Germany Jul ZEW Economic Sentiment, -18.0 f'cast, -16.1 last
     
  • (0500 ET/0900 GMT) Germany Jul ZEW Current conditions, 78.2 f'cast, 80.6 last
     

Key Events Ahead

  • (1300 ET/1700 GMT) Sabine Lautenschlager, member of the ECB's executive board speaks at 9th ECB Statistics Conference in Frankfurt

FX Beat

DXY: The dollar index rebounded from a 3-week low as the U.S. Treasury yields rose, with the benchmark 10-year rising from 2.84 percent to 2.86 percent, while2-yearr yields rose from 2.55 percent to 2.57 percent. The greenback against a basket of currencies trades 0.4 percent up at 94.12, having touched a low of 93.71 on Monday, its lowest since June 14. FxWirePro's Hourly Dollar Strength Index stood at 26.10 (Neutral) by 0600 GMT.

EUR/USD: The euro declined as the greenback rebounded from recent lows boosted by a robust recovery in USD/JPY and higher U.S. Treasury yields. The European currency traded 0.1 percent down at 1.1740, having touched a high of 1.1790 the session before, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 82.64 (Slightly Bullish) by 0600 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of U.S. JOLTS Job Openings report. 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 rallied to a 1-1/2 month peak as investors appeared to ignore concerns of the trade conflict between the U.S. and China and track higher U.S. Treasury yields for now. The major was trading 0.2 percent up at 111.09, having hit a high of 111.20 earlier, its highest since May 21. FxWirePro's Hourly Yen Strength Index stood at -74.46 (Bearish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. JOLTS Job Openings report. Immediate resistance is located at 111.39 (May 21 High), a break above targets 111.48 (Jan 18 High). On the downside, support is seen at 110.58 (5-DMA), a break below could take it lower 110.28 (July 4 Low).

GBP/USD: Sterling slumped, extending previous session losses, after the resignation of Prime Minister Theresa May's foreign minister and Brexit negotiator raised worries about a hard Brexit. The major traded 0.2 percent down at 1.3234, having hit a high of 1.3362 the day before; it’s highest since June 14. FxWirePro's Hourly Sterling Strength Index stood at -92.68 (Slightly Bearish) 0600 GMT. Investors’ attention will remain on UK manufacturing production, industrial production, trade balance and index of services reports, 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 0.1 percent down at 88.71 pence, having hit a low of 89.00 pence on Monday, it’s lowest since March 9.

AUD/USD: The Australian dollar slightly eased despite an index of Australian business conditions pointing to continued strength in sales and profits in June. The National Australia Bank's index of business conditions rose 1 point to +15 in June, while its employment index slipped 4 points to +53. The Aussie trades 0.1 percent down at 0.7459, having hit a high of 0.7483 earlier; it’s highest since June 14. FxWirePro's Hourly Aussie Strength Index stood at 33.49 (Neutral) by 0600 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7425 (21-DMA), a break below targets 0.7386 (10-DMA). On the upside, resistance is located at  0.7500, a break above could take it near 0.7547 (May 17 Low).

NZD/USD: The New Zealand dollar consolidated near recent peaks after data showed domestic electronic retail spending jumped 0.8 percent in June from a previous reading of 0.6 percent. The Kiwi trades 0.1 percent up at 0.6840, having touched a high of 0.6858 the day before earlier, its highest level since June 27. FxWirePro's Hourly Kiwi Strength Index was at 125.95 (Highly Bullish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6883, 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 rose, extending gains for the third straight session, while the greenback rebounded against a basket of currencies as the U.S. Treasury yields resumed rise.

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

Tokyo's Nikkei rallied 0.6 percent to 22,192.89 points, Australia's S&P/ASX 200 index eased 0.4 percent to 6,258.10 points, and South Korea's KOSPI surged 0.4 percent to 2,294.16 points.

Shanghai composite index rose 0.4 percent to 2,827.63 points, while CSI300 index was trading 0.2 percent up at 3,467.52 points.

Hong Kong’s Hang Seng was trading 0.5 percent higher at 28,826.34 points. Taiwan shares added 0.3 percent to 10,756.89 points.

Commodities Recap

Crude oil prices rose on the back of escalating concerns over potential supply shortages, and as hundreds of oil workers in Norway were set to strike later in the day. International benchmark Brent crude was trading 0.4 percent up at $78.52 per barrel by 0538 GMT, having hit a low of $76.35 on Friday, its lowest since June 27. U.S. West Texas Intermediate was trading 0.4 percent higher at $74.27 a barrel, after rising as high as $75.24 last week, its highest since Nov. 2014.

Gold prices consolidated within narrow ranges, after hitting a 2-week high in the previous session, amid political uncertainty over Brexit. Spot gold was 0.2 percent up at $1,257.46 an ounce by 0543 GMT, having touched a high of $1265.79 on Monday, its highest since Jun. 26. U.S. gold futures for August delivery were nearly unchanged at $1,259.90 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.865 percent higher by 0.006 bps, while 5-year yield was 0.007 bps up at 2.756 percent.

The Australian government bond futures dipped, with the three-year bond contract off 1.5 ticks at 97.915. The 10-year contract eased 2 ticks to 07.3600.

The New Zealand government bonds eased, sending yields 2.5 basis points higher towards the long end of the curve.

The Canadian government bond prices were lower across the yield curve, with the two-year down 6 Canadian cents to yield 1.945 percent and the 10-year falling 33 Canadian cents to yield 2.167 percent. The two-year yield touched its highest intraday since June 13 at 1.947 percent.


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