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Asia Roundup: Antipodeans rally on U.S.-China trade optimism, greenback consolidates near multi-week lows ahead of Fed policy meeting  Asian shares nudge higher amid holiday-thinned trading - Tuesday, October 22nd, 2019

Market Roundup

  • Oil steadies on weak demand
     
  • Gold eases amid U.S.-China trade-deal hopes

Economic Data Ahead

  • (0430 ET/0830 GMT) UK Public Sector Net Borrowing September
     
  • (0600 ET/1000 GMT) UK CBI Industrial Trends Survey - Orders October
     

Key Events Ahead

  • (0400 ET/0800 GMT) ECB Bank lending Survey

FX Beat

DXY: The dollar index consolidated within narrow ranges near multi-week lows as investors awaited a U.S. Federal Reserve meeting at the end of the month that could offer further signs of monetary easing. The greenback against a basket of currencies traded 0.05 percent down at 97.28, having touched a low of 97.14 on Friday, its lowest since August 9.

EUR/USD: The euro steadied after falling from an over 2-month peak in the previous session on reports that the German economy may have contracted in the three months to September, and a slowdown in exports is now threatening to affect the domestic economy as well. The European currency traded flat at 1.1153, having touched a high of 1.1179 on Monday, its highest since August 14. Investors’ attention will remain on ECB Bank Lending survey, ahead of the U.S. existing home sales and Richmond Fed manufacturing index. Immediate resistance is located at 1.1190, a break above targets 1.1230. On the downside, support is seen at 1.1132, a break below could drag it below 1.1094.

USD/JPY: The dollar surged against the safe-haven Japanese yen after U.S. President Donald Trump said that work toward ending the U.S.-China dispute was going well, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if progress is made. The major was trading flat at 108.62, having hit a low of 108.29 on Monday, its lowest since October 15. Investors’ will continue to track the broad-based market sentiment, ahead of Fed officials' speeches. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.25 (10-DMA), a break below could take it near at 108.03 (October 14).

GBP/USD: Sterling steadied below the 1.3000 handle, as investors remained cautious after House of Commons speaker John Bercow refused to allow a vote on Prime Minister Boris Johnson’s Brexit deal, adding to the obstacles to its ratification in time for an Oct. 31 deadline. The major traded 0.2 percent high at 1.2986, having hit a high of 1.3012 on Monday, it’s highest since May 13. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3047, a break above could take it near 1.3102. On the downside, support is seen at 1.2886 (5-DMA), a break below targets 1.2826. Against the euro, the pound was trading 0.2 percent up at 85.90 pence, having hit a high of 85.74 on Thursday, it’s highest since May 8.

AUSD/USD: The Australian dollar rallied to an over 1-month peak after U.S. President Donald Trump said efforts to end a U.S. trade war with China were going well as negotiators from the two nations work to nail down a Phase 1 trade deal text for their leaders to sign next month when they meet at November’s APEC summit. The Aussie trades 0.1 percent up at 0.6877, having hit a high of 0.6882 earlier, it’s highest since September 16. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6848, a break below targets 0.6811. On the upside, resistance is located at 0.6894, a break above could take it near 0.6918.

NZD/USD: The New Zealand dollar advanced to a 1-1/2 month high as investor sentiment improved after Chinese Vice Foreign Minister Le Yucheng stated that China and the United States have achieved some progress in their trade talks. The Kiwi trades 0.4 percent up at 0.6428, having touched a high of 0.6435 earlier, its highest level since September 12. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6450 (September 12High), a break above could take it near 0.6471 (August 13 High). On the downside, support is seen at 0.6372, a break below could drag it below 0.6326.

Equities Recap

Asian shares surged amid optimism about prospects for a U.S.-China trade deal.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.

Australia's S&P/ASX 200 index rose 0.3 percent to 6,672.20 points and South Korea's KOSPI rallied 1.05 percent to 2,086.11 points.

Shanghai composite index declined 0.1 percent to 2,935.94 points, while CSI 300 index traded 0.2 percent down at 3,873.66 points.

Hong Kong’s Hang Seng traded 0.1 percent higher at 26,760.29 points. Taiwan shares added 0.8 percent to 11,271.25 points.

Commodities Recap

Crude oil prices declined, extending losses for third straight session amid lingering worries over a global economic slowdown that could hurt oil demand. International benchmark Brent crude was trading 0.3 percent down at $58.87 per barrel by 0426 GMT, having hit a high of $60.26 last week, its highest since October 14. U.S. West Texas Intermediate was trading 0.05 percent lower at $53.43 a barrel, after rising as high as $54.60 last week, its highest since October 14.

Gold prices eased to a near 1-week low as reports that trade talks between Washington and Beijing were making progress boosted market sentiment. Spot gold was trading 0.05 percent down at $1,484.00 per ounce by 0430 GMT, having touched a low of $1,480.73 earlier in the session, its lowest since October 16. U.S. gold futures dropped 0.2 percent to $1,485.80.

Treasuries Recap

The Australian government bonds suffered during the Asian session of the second trading day of the week tracking a similar movement in the U.S. Treasuries after a slew of solid corporate earnings pushed Wall Street higher overnight. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 1.176 percent, the yield on the long-term 30-year bond surged 2 basis points to 1.763 percent while the yield on short-term 2-year traded flat at 0.802 percent.

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