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Asia Roundup: Antipodeans off-highs on soft Chinese trade data, greenback rebounds on U.S.-China trade optimism, Asian shares surge - Monday, October 14th, 2019

Market Roundup

  • Gold declines on U.S.-China trade optimism
     
  • China's nine-month exports to U.S. down 10.7% in dollar terms

Economic Data Ahead

  • (0500 ET/0900 GMT) EZ industrial production w.d.a YoY Aug
     
  • (0500 ET/0900 GMT) EZ industrial production s.a MoM Aug
     

Key Events Ahead

  • (0315 ET/0715 GMT) ECB De Guindos' speech

FX Beat

DXY: The dollar index rebounded from multi-week lows after U.S. President Donald Trump outlined the first phase of a deal to end the protracted U.S.-China trade war and suspended a threatened tariff hike. The greenback against a basket of currencies traded 0.2 percent up at 98.50, having touched a low of 98.20 in the previous session, its lowest since September 20.

EUR/USD: The euro steadied after rising to a 3-week peak in the previous session, as the greenback rebounded after U.S. President Donald Trump on Friday stated that the United States and China had reached a 'Phase 1' trade deal. The European currency traded flat at 1.1029, having touched a high of 1.1062 the prior session, its highest since September 20. Investors’ attention will remain on Eurozone industrial production and ECB De Guindos' speech, as U.S. markets remain shut on account of Columbus Day. 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 1.0986 (21-DMA), a break below could drag it below 1.0966 (10-DMA).

USD/JPY: The dollar declined after rallying to a 12-1/2 month peak in the previous session on news that Washington and Beijing announced progress toward a trade deal. On Friday, U.S. President Donald Trump outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike. The major was trading 0.1 percent down at 108.28, having hit a high of 108.62 the prior session, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, as the U.S. and Japanese markets remained closed. 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 107.68 (21-DMA), a break below could take it near at 107.31 (September 23 Low).

GBP/USD: Sterling slumped after rising to a 3-1/2 month peak in the prior session on news that the European Union agreed to hold another round of negotiations with London in a bid to break the deadlock and secure a deal before the October 31 deadline. On Sunday, officials from Downing Street and the EU said that more work would be needed to secure an agreement on Britain’s departure from the bloc. The major traded 0.5 percent down at 1.2575, having hit a high of 1.2706 on Friday, it’s highest since June 28. Investors’ attention will remain on the development surrounding Brexit and BoE Cunliffe's speech. Immediate resistance is located at 1.2710, a break above could take it near 1.2762. On the downside, support is seen at 1.2526, a break below targets 1.2459. Against the euro, the pound was trading 0.7 percent at 87.82 pence, having hit a high of 86.94 on Friday, it’s highest since May 15

AUD/USD: The Australian dollar eased from a near 1-month high recorded in the prior session after data showed China’s exports to the United States fell 10.7 percent from a year earlier in dollar terms in January-September, while U.S. imports dropped 26.4 percent during that period. The Aussie trades 0.2 percent down at 0.6775, having hit a high of 0.6810 on Friday, it’s highest since September 19. Immediate support is seen at 0.6747 (5-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 plunged as Chinese exports declined -0.7 percent in September versus +2.6 percent prior, while imports slumped -6.2 percent against -2.6 percent earlier. The Kiwi trades 0.5 percent down at 0.6306, having touched a high of 0.6354 on Friday, its highest level since September 18. Immediate resistance is located at 0.6355, a break above could take it near 0.6391 (September 16 High). On the downside, support is seen at 0.6283 a break below could drag it below 0.6229.

Equities Recap

Asian shares advanced amid signs of progress in the U.S.-China trade standoff.

MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.5 percent.

Australia's S&P/ASX 200 index surged 0.6 percent to 6,642.60 points and South Korea's KOSPI rallied 1.1 percent to 2,067.40 points.

Shanghai composite index rose 1.2 percent to 3,007.88 points, while CSI 300 index traded 1.1 percent up at 3,953.24 points.

Hong Kong’s Hang Seng traded 0.9 percent higher at 26,540.01 points. Taiwan shares added 1.6 percent to 10,066.95 points.

Commodities Recap

Crude oil prices declined after rising to a near 2-week peak in the previous session following scant details on the first phase of a trade deal between the United States and China. International benchmark Brent crude was trading 0.7 percent down at $60.17 per barrel by 0523 GMT, having hit a high of $60.66 on Friday, its highest since September 30. U.S. West Texas Intermediate was trading 0.8 percent lower at $54.36 a barrel, after rising as high as $54.91 on Friday, its highest since September 30.

Gold prices tumbled, extending losses for the third straight session as optimism surrounding U.S.-China trade talks increased risk appetite. Spot gold declined 0.1 percent to $1,485.96 per ounce by 0528 GMT, having touched a low of $1,473.88 on Friday, its lowest since October 1. U.S. gold futures inched up 0.1 percent to $1,490.20 per ounce.

Treasuries Recap

The Australian government bonds plunged during Asian trading session as investors await the Reserve Bank of Australia’s (RBA) September monetary policy meeting minutes, scheduled to be released on October 15 by 00:30GMT and the country’s employment report, due for release on the following day for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 3-1/2 basis points to 1.050 percent, the yield on the long-term 30-year bond surged nearly 2-1/2 basis points to 1.636 percent and the yield on short-term 2-year remained 2 basis points higher at 0.724 percent.

By Lactus Fernandes
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