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Asia Roundup: Antipodeans rally on U.S.-China trade talks hopes, greenback at multi-week lows as soft CPI figures support Fed rate cut speculation, investors eye EBC Draghi’s speech - Friday, October 11th, 2019

Market Roundup

  • Gold inches lower on Trump's remarks
     
  • Oil extends gains on the prospect of deeper OPEC output cuts

Economic Data Ahead

  • (0300 ET/0700 GMT) Spain consumer price index September
     
  • (0300 ET/0700 GMT) Spain HICP September
     

Key Events Ahead

  • (0530 ET/0930 GMT) European Central Bank President Mario Draghi's Speech
     
  • (0630 ET/1030 GMT) European Central Bank Vice-President Luis De Guindos gives a speech
     

FX Beat

DXY: The dollar index plunged to multi-week lows after data showed U.S. consumer prices were unchanged in September and underlying inflation retreated, supporting expectations the Federal Reserve will cut interest rates in October for the third time this year. The greenback against a basket of currencies traded 0.05 percent down at 98.64, having touched a low of 98.62 earlier, its lowest since September 25.

EUR/USD: The euro rose, extending gains for the third straight session after German Finance Minister Olaf Scholz at a meeting of euro finance ministers in Luxemburg on Thursday stated that Eurozone countries will put in place a joint budget to boost economic reforms. The European currency traded 0.1 percent up at 1.1017, having touched a high of 1.1033 the day before, its highest since September 20. Investors’ attention will remain on a series of data out from the Eurozone economies and ECB Draghi and De Guindos' speech, ahead of the U.S. import and export price index, Michigan prelim consumer sentiment index, Fed official's speeches. 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 1.0987 (21-DMA), a break below could drag it below 1.0957 (10-DMA).

USD/JPY: The dollar rallied to a near 2-week peak, as risk appetite improved after U.S. President Donald Trump said he would meet with China’s top trade negotiator today. The major was trading up at 107.99, having hit a high of 108.13 earlier, its highest since October 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S.  import and export price index, Michigan prelim consumer sentiment index, Fed official's speeches. Immediate resistance is located at 108.25 (September 13 High), a break above targets 108.63 (July 5 High). On the downside, support is seen at 107.66 (21-DMA), a break below could take it near at 107.31 (September 23 Low).

GBP/USD: Sterling surged, hovering towards a 2-week peak hit in the prior session after the prime ministers of Britain and Ireland revived hopes of a possible Brexit deal. On Thursday, Irish Prime Minister Leo Varadkar said a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union. The major traded 0.2 percent up at 1.2466, having hit a high of 1.2469 on Thursday, it’s highest since September 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2503, a break above could take it near 1.2582. On the downside, support is seen at 1.2369 (21-DMA), a break below targets 1.2295 (10-DMA). Against the euro, the pound was trading flat at 88.38 pence, having hit a high of 88.30 on Thursday, it’s highest since Sept. 25

AUD/USD: The Australian dollar rallied, extending the previous session rebound on hopes of a trade resolution between the United States and China. The Aussie trades 0.2 percent up at 0.6771, having hit a high of 0.6781 earlier, it’s highest since September 23. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6742, a break below targets 0.6687. On the upside, resistance is located at 0.6803 (September 25 High), a break above could take it near 0.6829 (September 5 High).

NZD/USD: The Zealand dollar consolidated within narrow ranges as investors remained on the sidelines as high-level U.S.-China trade negotiations were due to continue today. The Kiwi trades flat at 0.6318, having touched a low of 0.6277 on Thursday, its lowest level since October 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6348 (September 25 High), a break above could take it near 0.6391 (September 16 High). On the downside, support is seen at 0.6287 (10-DMA), a break below could drag it below 0.6249.

Equities Recap

Asian shares rallied as risk sentiment improved after U.S. President Donald Trump said he would meet with China’s top trade negotiator.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent.

Tokyo's Nikkei gained 1.2 percent to 21,798.87 points, Australia's S&P/ASX 200 index rallied 0.9 percent to 6,606.80 points and South Korea's KOSPI surged 1.01 percent to 2,048.57 points.

Shanghai composite index rose 0.9 percent to 2,974.37 points, while CSI 300 index traded 1.1 percent up at 3,914.47 points. Hong Kong’s Hang Seng traded 2.3 percent higher at 26,304.52 points.

Commodities Recap

Crude oil prices rose, extending previous session gains after producer club OPEC hinted at making deeper cuts in supply while optimism was revived over talks between the United States and China to end their trade war. International benchmark Brent crude was trading 0.4 percent up at $59.68 per barrel by 0529 GMT, having hit a high of $59.69 earlier, its highest since October 1. U.S. West Texas Intermediate was trading 0.4 percent higher at $54.09 a barrel, after rising as high as $54.15 earlier, its highest since October 2.

Gold prices edged lower as U.S. President Donald Trump’s remarks on progress in U.S.-China trade talks boosted risk appetite. Spot gold was trading flat at $1,493.40 per ounce by 0532 GMT, having touched a high of $1,516.96 on Thursday, its highest since October 3. U.S. gold futures dipped 0.2 percent to $1,498.50.

Treasuries Recap

The Australian government bond yields cheered market investors after trade negotiations began between the United States and China in Washington yesterday, keeping markets hopeful of a positive outcome by end of this week. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 12 basis points to 1.015 percent, the yield on the long-term 30-year bond surged nearly 13 basis points to 1.615 percent and the yield on short-term 2-year remained tad higher at 0.708 percent.

By Lactus Fernandes
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