Market Roundup
- China elects new economic team as President Xi kicks off second term
- U.S. tariffs, China trade tensions overshadow G20 finance meeting
- 45 U.S. trade groups urge Trump to avoid tariffs against China
- China's new home price growth slows as big cities decline
- Putin wins another six years at Russia's helm in landslide victory
- Sources contradict Sessions' testimony he opposed Russia outreach
- Japan PM takes blame for loss of trust over scandal as polls dive, denies involvement
- BoJ’s government debt holdings hit record Y449 trln in Q4
- Japan Feb trade surplus Y3.4 bln, Y99.6 bln deficit eyed, exp +1.8%, imp +16.5%
- Australia, ASEAN agree to start regional infrastructure cooperation
- Speculators raise U.S. dollar net shorts to largest since October -CFTC
Economic Data Preview
- No major economic data releases
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index extended gains for the fourth straight session, as traders braced for new Federal Reserve Chair Jerome Powell's first monetary policy meeting this week, where the bank is likely to hike U.S. interest rates and perhaps signal that as many as three hikes in store for the rest of the year. The greenback against a basket of currencies 0.2 percent up at 90.33, having touched a high of 90.38 on Friday, its highest since Mar. 1. FxWirePro's Hourly Dollar Strength Index stood at 31.47 (Neutral) by 0500 GMT.
EUR/USD: The eased, extending losses for the fourth straight session on the back of diverging monetary policy expectations. Investors no longer expect the European Central Bank to hike rates in 2019, while markets speculate that Fed would revise higher its dot plot chart to four 2018 rate hikes at the forthcoming meeting. The European currency traded 0.2 percent down at 1.2267, having touched a low of 1.2260 on Friday, its lowest since Mar. 2. FxWirePro's Hourly Euro Strength Index stood at -37.50 (Neutral) by 0400 GMT. Investors’ attention will remain on the Eurozone trade balance and construction output, ahead of FOMC Member Bostic's speech. Immediate resistance is located at 1.2336 (5-DMA), a break above targets 1.2383 (Mar. 15 High). On the downside, support is seen at 1.2251 (Mar. 2 Low), a break below could drag it lower 1.2221 (Feb 28 Low).
USD/JPY: The dollar slumped, extending previous session losses, as investors' risk appetite waned after weekend polls suggested a massive drop in public support for Prime Minister Shinzo Abe over his handling of a festering cronyism scandal, raising doubts about his ability to press forward with his reflationary economic agenda. The major was trading 0.2 percent down at 105.78, having hit a low of 105.60 the session before, its lowest since Mar. 7. FxWirePro's Hourly Yen Strength Index stood at 115.29 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of FOMC Member Bostic's speech. Immediate resistance is located at 106.29 (10-DMA), a break above targets 107.04 (Mar 9 High). On the downside, support is seen at 105.60 (Previous Session Low), a break below could take it lower 105.25.
GBP/USD: Sterling tumbled as a deadlock over the Irish border issue and recent headlines from senior officials weakened market sentiment. The major traded 0.2 percent down at 1.3914, having hit a high of 1.3995 on Wednesday, it’s highest since Feb. 27. FxWirePro's Hourly Sterling Strength Index stood at 68.01 (Bullish) by 0400 GMT. Investors’ focus will remain on the FOMC Member Bostic's speech, amid a lack of data from the UK docket. Immediate resistance is located at 1.3988, a break above could take it near 1.4070. On the downside, support is seen at 1.3889, a break below targets 1.3841 (Mar. 4 Low). Against the euro, the pound was trading 0.1 percent down at 88.15 pence, having hit a high of 88.05 pence earlier, it’s highest since Feb 28.
AUD/USD: The Australian dollar plunged to a 3-month low on recent trade wars concerns, as tensions continue to build with weekend news where the EU has laid out their retaliation for when Trump's administration executes the proposed tariffs. The Aussie trades 0.2 percent down at 0.7692, having hit a low of 0.7687 earlier; it’s lowest since Dec. 21. FxWirePro's Hourly Aussie Strength Index stood at -114.95 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7653 (Dec. 21 Low), a break below targets 0.7626 (Dec 14 Low). On the upside, resistance is located at 0.7738 (78.6% retracement of 0.7916 and 0.7687), a break above could take it near 0.7816 (10-DMA).
NZD/USD: The New Zealand dollar declined on the back of divergent policy outlooks between the Federal Reserve and Reserve Bank of New Zealand. The Kiwi trades 0.2 percent down at 0.7201, having touched a low of 0.7198 earlier, its lowest level since Mar. 1. FxWirePro's Hourly Kiwi Strength Index was at -88.19 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7289 (21-DMA), a break above could take it near 0.7354 (Mar 14 High). On the downside, support is seen at 0.7186 (Mar. 1 Low), a break below could drag it below 0.7176.
Equities Recap
Asian shares traded in a volatile market, while the greenback steadied near multi-week highs as investors remained cautious ahead of this week's Federal Reserve policy meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.4 percent.
Tokyo's Nikkei eased 1.05 percent to 21,452.82 points, Australia's S&P/ASX 200 index rallied 0.2 percent to 5,959.40 points and South Korea's KOSPI plunged 0.8 percent to 2,473.92 points.
Shanghai composite index rose 0.1 percent to 3,272.48 points, while CSI300 index was trading 0.1 percent up at 4,061.96 points.
Hong Kong’s Hang Seng was trading 0.1 percent higher at 31,535.08 points. Taiwan shares added 0.2 percent to 11,046.90 points.
Commodities Recap
Crude oil prices declined after rising to a 2-1/2 week high in the previous session, as increased drilling in the United States pointed to more output, raising concerns about a return of oversupply. International benchmark Brent crude was trading 0.4 percent down at $65.80 per barrel by 0426 GMT, having hit a high of $66.40 on Friday, its highest since Feb. 28. U.S. West Texas Intermediate was trading 0.4 percent down at $61.99 a barrel, after rising as high as $62.51 last week, its strongest since Mar. 7.
Gold prices declined as the dollar remained supported, with investors expecting the U.S. Federal Reserve to raise interest rates at this week's policy meeting. Spot gold fell 0.1 percent to $1,311.93 per ounce at 0432 GMT, having hit a low of $1,309.59 an ounce on Friday, its lowest since Mar. 1. U.S. gold futures for April delivery fell 0.1 percent to $1,310.4 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.851 percent higher by 0.004 bps, while 5-year yield was 0.007 bps high at 2.652 percent.
The Japanese government bonds edged slightly higher at the start of the trading week after the Bank of Japan (BoJ) reiterated, in its March Summary of Opinions that it will continue to pursue quantitative easing if it fails to achieve the 2 percent inflation target. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped to 0.04 percent, the yield on the long-term 30-year note also fell 1/2 basis point to 0.75 percent and the yield on short-term 2-year traded tad lower at -0.14 percent.
The Australian government bonds slumped at the start of the week as investors eye the Federal Reserve interest rate hike this week. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 2 basis points to 2.712 percent, the yield on the long-term 30-year note also jumped 2 basis points to 3.298 percent and the yield on short-term 2-year climbed 11/2 basis points to 1.980 percent.
The Canadian government bond prices were mixed across the maturity curve, with the two-year price down 0.5 Canadian cent to yield 1.763 percent and the benchmark 10-year rising 4 Canadian cents to yield 2.141 percent.
