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Asia Roundup: Antipodeans eases as soft Chinese PPI stoke deflation fears, dollar slumps against yen as weak U.S. retail sales support Fed's dovish stance, Asian shares plunge - Friday, February 15th, 2019  

Market Roundup

  • U.S. trade envoys to meet China's Xi, no decision on deadline extension
     
  • Chance of a U.S. recession up, number of Fed rate hikes down-POLL
     
  • China offers to end market-distorting subsidies but won't say how
     
  • Trump vows emergency declaration over wall, agrees to shutdown-averting bill
     
  • Spain's Socialist PM set to call snap election on Friday
     
  • China Jan CPI YY, 1.7%, 1.9% f'cast, 1.9% prev
     
  • China Jan CPI MM, 0.5%, 0.5% f'cast, 0.0% prev
     
  • China Jan PPI YY, 0.1%, 0.2% f'cast, 0.9% prev
     
  • U.S. fund investors charge into money market funds -Lipper
     
  • Foreign CB US debt holdings -$99 mln to $3.426 tln Feb 13 week
     
  • Treasuries -$914 mln to $3.036 tln, agencies +$882 mln to $320.127 bln
     

Economic Data Ahead

  • (0430 ET/0930 GMT) Great Britain Jan Retail Sales YY, 3.4% f'cast, 3.0% prev
     
  • (0430 ET/0930 GMT) Great Britain Jan Retail Sales MM, 0.2% f'cast, -0.9% prev
     
  • (0500 ET/1000 GMT) EZ Dec Eurostat Trade NSA (EUR), 19.0 bln prev
     
  • (0600 ET/1100 GMT) EZ Jan Reserve Assets Total (EUR), 719.05 bln prev
     

Key Events Ahead

  • (0700 ET/1200 GMT) Riksbank general council meeting - Stockholm
     
  • (0800 ET/1300 GMT) ECB's Benoit Coeure participates in C. Peter McColough Series on International Economics organized by CFR - New York City
     
  • (0955 ET/1455 GMT) FRB Atlanta's Raphael Bostic speaks on "Workforce Development" at Public Affairs Research Council of Alabama - Birmingham, Atlanta
     
  • (1045 ET/1545 GMT) ECB's Ignazio Angeloni participates in panel session titled "The Future of Banking: Will European Banks Survive?" - Bruneck, Italy

FX Beat

DXY: The dollar index nudged higher, hovering towards a near 2-month peak, after Fed Governor Lael Brainard stated that the U.S. Federal Reserve should stop paring its balance sheet by the end of this year, indicating the Fed could wind up with a permanently bigger balance sheet than had been expected earlier. The greenback against a basket of currencies trades 0.1 percent up at 97.08, having touched a high of 97.29 the day before, its highest since December 17. FxWirePro's Hourly Dollar Strength Index stood at 15.26 (Neutral) by 0400 GMT.

EUR/USD: The euro eased, reversing some of its previous session gains, weighed down by weaker-than-expected euro zone data and expectations the European Central Bank will keep monetary policy accommodative for the rest of the year. The European currency traded 0.1 percent down at 1.1285, having touched a low of 1.1248 on Thursday, its lowest since Nov. 13. FxWirePro's Hourly Euro Strength Index stood at -67.11 (Bearish) by 0400 GMT. Investors’ attention will remain on Eurozone trade balance and ECB Coeure's speech, ahead of the U.S. capacity utilization, industrial production, and export and import price index. Immediate resistance is located at 1.1329 (5-DMA), 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 slumped to a 4-day low, as weak U.S. retail sales data reinforced expectations the Federal Reserve will not raise rates this year. On Thursday, the major rallied to a 1-1/2 month peak as investors cheered U.S. President Donald Trump's upbeat assessment of the trade talks with China. The major was trading 0.2 percent down at 110.29, having hit a high of 111.12 the day before, its highest since December 27. FxWirePro's Hourly Yen Strength Index stood at 48.27 (Neutral) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. capacity utilization, industrial production, and export and import price index. 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 110.11 (10-DMA), a break below could take it lower at 109.60 (Feb. 7 Low).

GBP/USD: Sterling consolidated near a 1-month low touched in the previous session after Prime Minister Theresa May lost a symbolic Brexit vote in parliament that undermined her pledge to European Union leaders to get her deal approved if they grant her concessions.  The major traded flat at 1.2798, having hit a low of 1.2772 on Thursday; it’s lowest since January 15. FxWirePro's Hourly Sterling Strength Index stood at -90.62 (Slightly Bearish) 0400 GMT. Investors’ attention will remain on developments surrounding Brexit deal and UK retail sales, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2927 (10-DMA), a break above could take it near 1.2996 (February 7 High). On the downside, support is seen at 1.2766 (Nov 22 Low), a break below targets 1.2728 (Jan. 10 Low). Against the euro, the pound was trading flat at 87.18 pence, having hit a low of 88.39 on Thursday, it’s lowest since Jan. 21.

AUD/USD: The Australian dollar eased after data showed China's producer price inflation slowed for a seventh straight month in January to its weakest since September 2016. The selling pressure intensified after Reserve Bank of Australia Assistant Governor Christopher Kent welcomed the domestic currency's decline given there was still slack in the labour market and inflation remained below target. The Aussie trades 0.3 percent down at 0.7087, having hit a high of 0.7135 on Wednesday; it’s highest since February 6. FxWirePro's Hourly Aussie Strength Index stood at -46.73 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7044 (Dec. 26 Low), a break below targets 0.7016 (Dec. 27 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 retreated from a 1-week peak hit in the prior session as China faced the risk of a return to deflation, amid concerns of no apparent agreement in sight in U.S.-China trade talks. The Kiwi trades 0.2 percent down at 0.6821, having touched a high of 0.6855 on Thursday, its highest level Feb. 6. FxWirePro's Hourly Kiwi Strength Index was at 153.37 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6862 (Jan. 29 High), a break above could take it near 0.6911 (Dec. 11 High). On the downside, support is seen at 0.6766 (Feb. 6 Low), a break below could drag it below 0.6706 (Jan. 22 Low).

Equities Recap

Asian shares slumped after data showed China's producer prices slow for 7th straight month, raising concerns the Chinese economy may see the return of deflation as domestic demand cools.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent.

Tokyo's Nikkei declined 1.2 percent to 20,876.89 points, Australia's S&P/ASX 200 index gained 0.1 percent to 6,066.10 points and South Korea's KOSPI fell 1.6 percent to 2,189.94 points.

Shanghai composite index eased 0.8 percent to 2,697.63 points, while CSI300 index traded 1.2 percent down at 3,360.87 points.

Hong Kong’s Hang Seng traded 1.7 percent lower at 27,939.77 points. Taiwan shares shed 0.3 percent to 10,064.78 points.

Commodities Recap

Crude oil prices surged to a near 3-month peak, amid U.S. sanctions against Venezuela and Iran and supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC). International benchmark Brent crude was trading 0.6 percent up at $65.00 per barrel by 0439 GMT, having hit a high of $65.08 earlier, its highest since November 20. U.S. West Texas Intermediate was trading 0.5 percent higher at $54.69 a barrel, after rising as high as $54.94, its highest since the February 5.

Gold prices steadied as the dollar weakened slightly after disappointing U.S. data indicated slowing economic momentum that supported the U.S. Federal Reserve's patient monetary policy approach. Spot gold was trading flat at $1,312.59 per ounce at 0447 GMT, having touched a high of $1,318.02 on Wednesday, its highest level since February 4. U.S. gold futures were up 0.1 percent at $1,315 an ounce.

Treasuries Recap

The Japanese government bond prices rose as U.S. Treasuries held on to overnight gains. The 10-year JGB futures rose 0.06 points to 152.85, the benchmark 10-year cash JGB yield fell one basis point to minus 0.025 percent. The 20-year yield declined 1.5 basis points to 0.415 percent, the 30-year yield eased 2.5 basis points to 0.590 percent, and the 40-year yield also gave up 2.5 basis points to 0.665 percent.

The Australian government bond futures rose, with the three-year bond contract adding 2.5 ticks to 98.340, while the 10-year contract rose 4 ticks to 97.8950.

The yields on New Zealand's 2-year paper shot back up to 1.725 percent having hit historic lows at 1.61 percent early in the week

The Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 8.5 Canadian cents to yield 1.768 percent and the 10-year climbed 47 Canadian cents to yield 1.880 percent.

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May 22 11:30 UTC Released

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