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Asia Roundup: Antipodeans off multi-month peaks on renewed U.S.-China trade war tensions, yen gains as Fed raises concerns over slowing global economic growth, Asian shares volatile - Monday, November 19th, 2018

Market Roundup

  • APEC fails to reach consensus as U.S.-China divide deepens
     
  • U.S. Vice President Pence vows no end to tariffs until China bows
     
  • UK PM May: Getting rid of me risks delaying Brexit
     
  • UK has intense week of Brexit negotiations ahead -PM May
     
  • UK business morale hits lowest since at least 2009: IHS Markit
     
  • ECB can adapt policy normalisation after bond buys end - Villeroy
     
  • N.Korea's new 'tactical' weapon test highlights military modernization
     
  • Republican Scott secures Florida U.S. Senate seat after recount
     
  • Chinese lenders, insurers must support small and private firms - regulator
     
  • New Zealand Q3 PPI - Inputs (qq), 1.4%, 1.0% prev
     
  • New Zealand Q3 PPI - Outputs (qq), 1.5%, 0.9% prev
     
  • Japan Oct Exports (yy), 8.2%, 9.0% f'cast, -1.2% prev, -1.3% rvsd
     
  • Japan Oct Imports (yy), 19.9%, 14.5% f'cast, 7.0% prev
     
  • Japan Oct Trade Balance Total Yen, -449.3 bln, -70.0 bln f'cast, 139.6 bln prev, 131.3 bln rvsd
     

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (0415 ET/0915 GMT) ECB Chair of the Supervisory Board Daniele Nouy participates in conversation at the 19th Handelsblatt Annual Conference "EBR – European Banking Regulation" in Frankfurt, Germany.
     
  • (0700 ET/1200 GMT) BoE Executive Director for Financial Stability Strategy and Risk Alex Brazier speaking at Denmark's Nationalbank Macroprudential Policy Conference, Copenhagen.
     
  • (0830 ET/1330 GMT) Europe's Economic Commissioner Pierre Moscovici holds a news conference at the EU Commission's headquarters in Rome.
     
  • (0900 ET/1400 GMT) Norway Central Bank Deputy Governor Jon Nicolaisen gives a speech at a conference hosted by the Federation of Norwegian Industries in Oslo.
     
  • (1045 ET/1545 GMT) New York Fed President John Williams participates in moderated discussion with the NYC Hispanic Chamber of Commerce in New York.
     

FX Beat

DXY: The dollar index rebounded from a 10-day low as a fourth U.S. interest rate hike for this year is expected next month and policymakers had indicated two more by June 2019. The greenback against a basket of currencies trades 0.1 percent up at 96.46, having touched a low of 96.38 earlier, its lowest since Nov 8. FxWirePro's Hourly Dollar Strength Index stood at -65.28 (Bearish) by 0600 GMT.

EUR/USD: The euro eased after rising to an over 1-week peak earlier in the day after European Central Bank policymaker Francois Villeroy de Galhau stated ECB's monetary policy will stay easy even after it probably stops adding to its bond programme in December and it can adapt its policy normalization as needed. The European currency traded 0.1 percent down at 1.1402, having touched a high of 1.1421, its highest since Nov. 8. FxWirePro's Hourly Euro Strength Index stood at 111.23 (Highly Bullish) by 0600 GMT. Investors’ attention will remain on the Eurozone current account and construction output, ahead of the U.S. housing market index and FOMC member Williams’s speech. Immediate resistance is located at 1.1446 (November 8 High), a break above targets 1.1499 (November 7 High). On the downside, support is seen at 1.1351 (November 8 Low), a break below could drag it till 1.1302 (October 31 Low)

USD/JPY: The dollar slumped to a 2-week low after Federal Reserve policymakers expressed caution over the global growth outlook, prompting traders to reassess the pace of future U.S. interest rate hikes. The major was trading 0.1 percent down at 112.75, having hit a low of 112.61, its lowest since November 2. FxWirePro's Hourly Yen Strength Index stood at -1.35 (Neutral) by 0600 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing market index and FOMC member Williams’s speech. Immediate resistance is located at 113.00 (November 1 High), a break above targets 113.50 (November 6 High). On the downside, support is seen at 112.56 (November 2 Low), a break below could take it lower 112.35 (October 22 Low).

GBP/USD: Sterling surged as news that Environment Secretary Michael Gove would stay in the cabinet outweighed a growing uncertainty that Britain could exit the European Union without any agreement. The major traded 0.1 percent up at 1.2838, having hit a low of 1.2723 on Thursday; it’s lowest since October 31. FxWirePro's Hourly Sterling Strength Index stood at -68.71 (Bearish) 0600 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.2853 (October 29 High), a break above could take it near 1.2919 (October 25 High). On the downside, support is seen at 1.2776 (October 26 Low), a break below targets 1.2723 (November 14 Low). Against the euro, the pound was trading 0.1 percent up at 88.84 pence, having hit a low of 89.05 on Friday, it’s lowest since October 31.

AUD/USD: The Australian dollar declined after rising to an over 2-month peak in the previous session following U.S. Vice President Mike Pence comments, citing that there would be no end to U.S. tariffs on $250 billion of Chinese goods until China changed its ways. The Aussie trades 0.2 percent down at 0.7313, having hit a high of 0.7337 on Friday; it’s highest since August 29. FxWirePro's Hourly Aussie Strength Index stood at 57.31 (Bullish) by 0600 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7247 (November 8 Low), a break below targets 0.7205 (November 6 Low). On the upside, resistance is located at 0.7319 (August 17 High), a break above could take it near 0.7362 (August 28 High).

NZD/USD: The New Zealand dollar eased as comments from the U.S. officials increased uncertainty over the ongoing trade situation between the U.S. and China. The Kiwi trades 0.4 percent down at 0.6851, having touched a high of 0.6883 on Friday, its highest level since late July. FxWirePro's Hourly Kiwi Strength Index was at 74.50 (Bullish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6921 (June 25 High), a break above could take it near 0.6976 (June 15 High). On the downside, support is seen at 0.6787 (November 15 Low), a break below could drag it below 0.6720 (August 3 Low)

Equities Recap

Asian shares traded in a volatile market amid conflicting signals on the prospects for an agreement in the U.S.-China trade dispute and the Federal Reserve's concerns over the global economy.

MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.

Tokyo's Nikkei surged 0.6 percent to 21,821.34 points, Australia's S&P/ASX 200 index fell 0.6 percent to 5,693.70 points and South Korea's KOSPI gained 0.4 percent to 2,100.56 points.

Shanghai composite index rose 0.9 percent to 2,703.51 points, while CSI300 index traded 1.2 percent up at 3,294.60 points.

Hong Kong’s Hang Seng traded 0.6 percent higher at 26,341.52 points. Taiwan shares added 0.3 percent to 9,828.69 points.

Commodities Recap

Crude oil prices surged as traders expect Saudi Arabia to push producer cartel OPEC to cut supply towards year-end.  International benchmark Brent crude was trading 0.6 percent up at $67.30 per barrel by 0626 GMT, having hit a low of $65.20 on Tuesday, its lowest since mid- March. U.S. West Texas Intermediate was trading 1.02 percent up at $57.34 a barrel, after falling as low as $54.79 on Tuesday, its lowest since Nov. 2017.

Gold prices declined from a 1-week peak after comments from Federal Reserve officials showing caution over the global economy, prompting traders to reassess the pace of future U.S. interest rate hikes. Spot gold was trading 0.2 percent down at $1,219.26 per ounce at 0628 GMT, having hit a high of $1225.17 on Friday, its highest since Nov. 8. U.S. gold futures were down 0.1 percent at $1,222.3 per ounce.

Treasuries Recap 

The Japanese government bonds remained higher on the first trading day of the week Monday, following a worse-than-expected trade balance data for the month of October, released late yesterday. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1-1/2 basis points to 0.095 percent, the yield on the long-term 30-year note fell 1 basis point to 0.852 percent while the yield on short-term 2-year remained tad lower at -0.144 percent by 05:40GMT.

The Australian government bonds gained across the curve during Asian session amid global equity sell-off. Sentiment deteriorated earlier on dovish comments from Federal Reserve Vice Chair Clarida. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 3 basis points to 2.662 percent, the yield on the long-term 30-year bond dipped 2 basis points to 3.187 percent and the yield on short-term 2-year down 1-1/2 basis points to 2.050 percent.

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