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Asia Roundup: Antipodeans rebound from multi-week lows, greenback eases on U.S. stimulus hope, markets eye ECB President Lagarde's speech - Wednesday, October 21st, 2020 

Market Roundup

  • Oil prices gain on U.S. stimulus deal optimism
     
  • Gold rallies on weaker dollar
     
  • Australian retail sales fall 1.5 percent in September
     

Economic Data Ahead

  • No Major Economic Data Releases

Key Events Ahead

  • (0330 ET/0730 GMT) ECB's President Lagarde speech
     
  • (0345 ET/0745 GMT) ECB's Lane speech
     
  • (0600 ET/1000 GMT) ECB's De Guindos speech
     

FX Beat

DXY: The dollar index plunged to a 1-month low as investors awaited the outcome of the fiscal stimulus. The greenback against a basket of currencies traded 0.1 percent up at 93.74, having touched a high of 93.90 on Thursday, its highest since October 2.

EUR/USD: The euro rallied to a 1-month peak after the European Central Bank President Christine Lagarde stated that the central bank will maintain an accommodative policy in response to the ongoing coronavirus crisis. She also said that about 590 billion of the ECB’s 1,350 billion euro asset purchase programme had been committed so far and that this programme was helping to lower long-term interest rates. The European currency traded 0.3 percent higher at 1.1853, having touched a high of 1.1854 earlier, its highest since September 21. Investors’ attention will remain on series of economic data from the Eurozone economies, ECB De Guindos, Lane and President Lagarde's speech, ahead of the Fed's Beige Book and Fed's Brainard speech. Immediate resistance is located at 1.1871, a break above targets 1.1900. On the downside, support is seen at 1.1786, a break below could drag it below 1.1742.

USD/JPY: The dollar slumped to a near 1-week low as investors remain cautious about the chances of a U.S. fiscal spending deal before the U.S. presidential election on November 3. The White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package as President Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party. The major was trading 0.2 percent down at 105.26, having hit a low of 105.25 earlier, its lowest since October 16. Investors’ will continue to track the broad-based market sentiment, ahead of the Fed's Beige Book and Fed's Brainard speech. Immediate resistance is located at 105.73, a break above targets 106.00. On the downside, support is seen at 105.08, a break below could take it near at 104.84.        

GBP/USD: Sterling rose, extending gains for the third straight session, as investors searched for clues on how likely it was for Britain to reach a trade deal with the European Union by the end of the year. The major traded 0.4 percent higher at 1.2990, having hit a low of 1.2861 last week, it’s lowest since October 7. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3030, a break above could take it near 1.3064. On the downside, support is seen at 1.2906, a break below targets 1.2883. Against the euro, the pound was trading flat at 91.28 pence, having hit a low of 91.27 on Tuesday, it’s lowest since October 7.

AUD/USD: The Australian dollar rebounded from a near 1-month low after initial estimates showed the country's retail sales fell 1.5 percent in September from the month before, although sales during the September quarter climbed a solid 6.8 percent from a year ago. Separate data showed, job vacancies rose by over 6 percent last month with gains in each state and territory. Although upside appears limited as the Reserve Bank of Australia is widely expected to further cut the cash rate to 0.1 percent at its Nov.3 meeting and expand its bond-buying programme to include long-dated debt. The Aussie trades 0.6 percent up at 0.7087, having hit a low of 0.7020 on Tuesday, it’s lowest since September 25. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7121, a break above could take it near 0.7151. On the downside, support is seen at 0.7028, a break below targets 0.7005.

NZD/USD: The New Zealand dollar bounced back from a near 2-week low as optimism over a pre-election U.S. fiscal stimulus boosted risk assets. The Kiwi traded 0.7 percent higher at 0.6621, having touched a low of 0.6552 on Tuesday, its lowest level since October 8. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6646, a break above could take it near 0.6662. On the downside, support is seen at 0.6552, a break below could drag it below 0.6527.

Equities Recap

Asian shares gained as renewed hopes for a new round of U.S. stimulus boosted investor risk sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent.

Tokyo's Nikkei rose 0.3 percent to 23,639.46 points, Australia's S&P/ASX 200 index rose 0.1 percent to 6,191.80 points. South Korea's KOSPI rallied 0.5 percent to 2,370.86 points.

Shanghai composite index fell 0.1 percent to 3,325.02 points, while CSI 300 index traded 0.05 percent down at 4,792.83 points.

Hong Kong’s Hang Seng traded 1.01 percent higher at 24,819.29 points. Taiwan shares added 0.1 percent to 12,877.25 points.

Commodities Recap

Crude oil prices surged as the White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package that could boost fuel demand as President Donald Trump said he was willing to accept a large aid bill. International benchmark Brent crude was trading 0.1 percent up at $42.78 per barrel by 0546 GMT, having hit a low of $42.21 on Tuesday, its lowest since October 15. U.S. West Texas Intermediate was trading 0.5 percent higher at $41.37 a barrel, after rising as high as $41.87 on Tuesday, its highest since September 2.

Gold prices surged to a 1-week peak as optimism that U.S. lawmakers could reach agreement on a pre-election coronavirus relief package weighed on the dollar. Spot gold was trading 0.5 percent higher at $1,917.00 per ounce by 0551 GMT, having hit a high of $1920.48 earlier, its highest since October 13. U.S. gold futures were up 0.4 percent at $1,922.80.

Treasuries Recap

The U.S. Treasury yields eased, with the benchmark 10-year note yield trading at 0.767 percent and the 30-year yield at 1.555 percent.

The Australian government bond futures fell, with the 3-year bond contract down half tick at 99.83. The 10-year contract dropped 5 ticks to 99.19.

The New Zealand government bonds declined, with yields up 5-6 basis points at the long-end of the curve.

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