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Asia Roundup: Antipodeans at 1-1/2 week peak, dollar gains against yen on U.S.-China trade deal hopes; Asian shares rally - Monday, February 18th, 2019

Market Roundup

  • U.S. blocks North Korean air traffic revival ahead of Trump-Kim summit - sources
  • U.S. agency submits auto tariff probe report to White House
  • China-U.S. trade talks 'making a final sprint' - state media
  • China's Jan car sales fall 15.8 pct y/y, seventh month of decline
  • Foreign demand for Japanese machinery slumps by most since 2007
  • UK's May to speak to every EU head in bid for Brexit deal changes
  • UK businesses plan to raise pay by most since 2012 - CIPD
  • Pence chastises EU, rejects Merkel's call to work with Russia
  • ECB's Rehn sees euro zone economy weakening
  • Saudi crown prince begins Asia tour with $20 bln Pakistan investment pledge

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (0600 ET/1100 GMT) Belgian Central Bank Governor Pierre Wunsch to present the central bank's annual report in Brussels
  • (1115 ET/1615 GMT) ECB Supervisor Andrea Enria participates in a panel discussion at an event in Brussels

FX Beat

DXY: The dollar index fell to a 5-day low, as investors cautiously awaited minutes of the Federal Reserve's last policy meeting, due Wednesday that could provide guidance on the path of rates this year. The greenback against a basket of currencies trades 0.1 percent down at 96.81, having touched a high of 97.37 the session before, its highest since December 17. FxWirePro's Hourly Dollar Strength Index stood at -118.85 (Highly Bearish) by 0500 GMT.

EUR/USD: The euro rebounded after falling to a 3-month low in the previous session on expectations the European Central Bank will keep its monetary policy accommodative due to low growth, tepid inflation and political uncertainties. The European currency traded 0.2 percent up at 1.1310, having touched a low of 1.1234 on Friday, its lowest since Nov. 13. FxWirePro's Hourly Euro Strength Index stood at -71.49 (Slightly Bearish) by 0500 GMT. Immediate resistance is located at 1.1341 (Feb. 13 High), a break above targets 1.1368 (Feb.7 High).. On the downside, support is seen at 1.1216 (Nov. 13 Low), a break below could drag it till 1.1180.

USD/JPY: The dollar steadied against the Japanese yen as both the United States and China reported progress in five days of negotiations in Beijing last week. However, data showing China's automobile sales in January tumbled 15.8 percent from a year earlier raised concerns over the strength of the Chinese economy. The major was trading 0.1 percent down at 110.52, having hit a high of 111.12 on Thursday, its highest since December 27. FxWirePro's Hourly Yen Strength Index stood at 50.80 (Bullish) by 0500 GMT. Immediate resistance is located at 111.05 (Feb. 13 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 110.25 (10-DMA), a break below could take it lower at 109.60 (Feb. 7 Low).

GBP/USD: Sterling consolidated above the 1.2900 handle after the Irish foreign minister stated that despite Prime Minister Theresa May's latest parliamentary loss, European Union states still stand willing to offer a package to help her get a Brexit withdrawal deal. The major traded 0.2 percent up at 1.2908, having hit a low of 1.2772 on Thursday; it’s lowest since January 15. FxWirePro's Hourly Sterling Strength Index stood at 64.52 (Bullish) 0500 GMT. Immediate resistance is located at 1.2958 (Feb. 18 High), a break above could take it near 1.2996 (February 7 High). On the downside, support is seen at 1.2845 (Feb 11 Low), a break below targets 1.2766 (Nov 22 Low). Against the euro, the pound was trading flat at 87.60 pence, having hit a high of 87.42, it’s highest since Feb. 8.

AUD/USD: The Australian dollar rallied to a 1-1/2 week peak, amid hopes of some resolution in the protracted U.S.-China trade war and expectations of expansionary global monetary policy. The Aussie trades 0.1 percent up at 0.7150, having hit a high of 0.7158; it’s highest since February 6. FxWirePro's Hourly Aussie Strength Index stood at 59.83 (Bullish) by 0500 GMT. Immediate support is seen at 0.7089 (Feb. 7 Low), a break below targets 0.7044 (Dec. 26 Low). On the upside, resistance is located at 0.7166 (January 24 High), a break above could take it near 0.7203 (January 28 High).

NZD/USD: The New Zealand dollar advanced to a near 2-week peak, as expectations the United States and China would come to an agreement to resolve their year-long trade dispute boosted risk sentiment. The Kiwi trades 0.2 percent up at 0.6877, having touched a high of 0.6893, its highest level Feb. 6. FxWirePro's Hourly Kiwi Strength Index was at 60.51 (Bullish) by 0500 GMT. Immediate resistance is located at 0.6911 (Dec. 11 High), a break above could take it near 0.6941 (Feb. 1 High). On the downside, support is seen at 0.6808 (21-DMA), a break below could drag it below 0.6766 (Feb. 6 Low).

Equities Recap

Asian shares jumped amid hopes for progress in U.S.-China trade talks in Washington this week and expectations of more policy stimulus from major central banks.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.0 percent.

Tokyo's Nikkei gained 1.8 percent to 21,281.85 points, Australia's S&P/ASX 200 index surged 0.4 percent to 6,089.80 points and South Korea's KOSPI advanced 0.6 percent to 2,210.89 points.

Shanghai composite index rose 2.7 percent to 2,754.36 points, while CSI300 index traded 3.2 percent up at 3,445.74 points.

Hong Kong’s Hang Seng traded 1.7 percent higher at 28,372.98 points. Taiwan shares shed 0.8 percent to 10,145.28 points.

Commodities Recap

Crude oil prices steadied after rising to their highest this year earlier in the session as a drop in China's automobile sales in January raised concerns about fuel demand in the world's second-largest oil consumer. International benchmark Brent crude was trading 0.1 percent up at $66.33 per barrel by 0513 GMT, having hit a high of $66.76 earlier, its highest since November 20. U.S. West Texas Intermediate was trading 0.1 percent higher at $55.82 a barrel, after rising as high as $56.11, its highest since the November 20.

Gold prices rallied to their strongest level in more than 2-weeks as the dollar weakened on hopes the United States and China are nearing a trade deal. Spot gold gained 0.2 percent to $1,323.31 per ounce by 0521 GMT, having touched a high of $1,325.21 earlier, its highest level since January 31. U.S. gold futures rose 0.4 percent to $1,327.8 an ounce.

Treasuries Recap

The Japanese government bond prices were steady, with the benchmark 10-year JGB futures edging near their 2-1/2-year high touched last month. The benchmark 10-year JGB futures rose 0.06 point to 152.89. The benchmark 10-year cash JGB yield fell 0.5 basis point to minus 0.03 percent. The five-year JGB yield dropped 0.5 basis point to -0.175 percent. The 30-year JGB yield and the 40-year JGB yield were at 0.590 percent and 0.665 percent respectively.

The Australian government bond futures slipped, with the three-year bond contract off 2.5 ticks at 98.32. The 10-year contract fell 3 ticks to 97.87.

The New Zealand government bonds eased, sending yields 1-2 basis points higher at the long-end.

  • Market Data

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