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Asia Roundup: Antipodeans ease on downbeat Chinese factory prices, dollar declines against yen as U.S.-China trade deal, Brexit hopes ebb, Asian shares nudge higher - Tuesday, October 15th, 2019

Market Roundup

  • China's factory prices post steepest fall in three years
     
  • Gold steady ahead of crucial Brexit talks

Economic Data Ahead

  • (0430 ET/0830 GMT) United Kingdom Claimant Count Unem Change
     
  • (0430 ET/0830 GMT) United Kingdom ILO Unemployment Rate
     
  • (0430 ET/0830 GMT) United Kingdom Employment Change
     
  • (0430 ET/0830 GMT) United Kingdom Avg Wk Earnings 3M YY
     
  • (0430 ET/0830 GMT) United Kingdom Avg Earnings (Ex-Bonus)
     
  • (0500 ET/0900 GMT) Germany ZEW Economic Sentiment
     
  • (0500 ET/0900 GMT) Germany ZEW Current Conditions
     
  • (0500 ET/0900 GMT) Euro Zone  ZEW Survey Expectations

Key Events Ahead

  • (0430 ET/0830 GMT) Bank of England Financial Stability Report

FX Beat

DXY: The dollar index traded flat after U.S. Treasury Secretary Steven Mnuchin said on Monday that an additional round of tariffs on Chinese imports will likely be imposed if a trade deal with China has not been reached by December. The greenback against a basket of currencies traded flat at 98.39, having touched a low of 98.20 on Friday, its lowest since September 20.

EUR/USD: The euro consolidated within narrow ranges, amid increasing caution surrounding both Brexit and U.S.-China trade talks. The European currency traded flat at 1.1029, having touched a high of 1.1062 on Friday, its highest since September 20. Investors’ attention will remain on a series of data out of Eurozone economies and EZ ZEW Survey- Economic Sentiment, amid a lack of significant economic data from the U.S. docket. Immediate resistance is located at 1.1059 (78.6% retracement of 1.1109 and 1.0879), a break above targets 1.1084. On the downside, support is seen at 1.0998 (5-DMA), a break below could drag it below 1.0979 (10-DMA).

USD/JPY: The dollar declined, halting a 4-day rally as optimism over trade negotiations between U.S.-China and for an orderly British exit from the European Union started to fade. The major was trading 0.1 percent down at 108.32, having hit a high of 108.62 on Friday, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, as the U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 108.72 (June 17 High), a break above targets 108.99 (July 31 High). On the downside, support is seen at 107.86 (5-DMA), a break below could take it near at 107.31 (September 23 Low)

GBP/USD: Sterling edged up, reversing some of its previous session losses after Prime Minister Boris Johnson said he wants to strike an exit deal at an EU summit on Thursday and Friday to allow an orderly departure on October 31. The major traded 0.1 percent up at 1.2619, having hit a high of 1.2706 on Friday, it’s highest since June 28. Investors’ attention will remain on the development surrounding Brexit,  ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2710, a break above could take it near 1.2762. On the downside, support is seen at 1.2515, a break below targets 1.2459. Against the euro, the pound was trading 0.1 percent up at 87.41 pence, having hit a high of 86.94 on Friday, it’s highest since May 15

AUD/USD: The Australian dollar eased after data showed China’s factory-gate prices declined at their fastest pace in more than three years in September, reinforcing the case for Beijing to unveil further stimulus. The Aussie trades down at 0.6764, having hit a high of 0.6810 on Friday, it’s highest since September 19. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6743 (10-DMA), a break below targets 0.6687. On the upside, resistance is located at 0.6829 (September 5 High), a break above could take it near 0.6869 (September 18 High).

NZD/USD: The New Zealand dollar declined, extending previous session losses, after data showed China's producer price index dropped 1.2 percent year-on-year in September, recording the steepest decline since July 2016. The Kiwi trades 0.1 percent down at 0.6293, having touched a low of 0.6277 on Thursday, its lowest level since October 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6348 (September 25 High), a break above could take it near 0.6391 (September 16 High). On the downside, support is seen at 0.6277, a break below could drag it below 0.6249.

Equities Recap

Asian shares edged higher as the United States agreed to delay an Oct. 15 increase in tariffs on Chinese goods while Beijing said it would buy as much as $50 billion of U.S. agricultural products.

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

Tokyo's Nikkei gained 1.9 percent to 22,207.21 points, Australia's S&P/ASX 200 index rallied 0.1 percent to 6,652.00 points and South Korea's KOSPI declined 0.05 percent to 2,067.13 points.

Shanghai composite index eased 0.5 percent to 2,994.08 points, while CSI 300 index traded 0.4 percent down at 3,937.53 points.

Hong Kong’s Hang Seng traded 0.1 percent lower at 26,493.83 points. Taiwan shares added 0.4 percent to 11,111.80 points.

Commodities Recap

Crude oil prices declined, extending previous session losses as weak Chinese economic data for September added to lingering concerns about the feasibility of the U.S.-China trade deal announced by President Trump late last week. International benchmark Brent crude was trading 0.5 percent down at $58.86 per barrel by 0507 GMT, having hit a high of $60.66 on Friday, its highest since September 30. U.S. West Texas Intermediate was trading 0.5 percent lower at $53.22 a barrel, after rising as high as $54.91 on Friday, its highest since September 30.

Gold prices steadied below the $1,500 per ounce level as markets braced for talks between Britain and the European Union that will determine how smooth Britain’s departure will be from the trading bloc. Spot gold was trading flat at $1,493.48 per ounce by 0509 GMT, having touched a low of $1,473.88 on Friday, its lowest since October 1. U.S. gold futures were a shade lower at $1,496.90.

Treasuries Recap

The Australian government bonds jumped during Asian trading session after the Reserve Bank of Australia’s (RBA) September monetary policy meeting minutes hinted at further easing, noting "prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time". The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 3-1/2 basis points to 1.013 percent, the yield on the long-term 30-year bond also slumped 3-1/2 basis points to 1.600 percent and the yield on short-term 2-year traded nearly 2 basis points lower at 0.703 percent.

By Lactus Fernandes
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