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Asia Roundup: Antipodeans rebound on China's stimulus hope, dollar steadies against yen amid prevalent geopolitical tensions, Asian shares volatile - Monday, October 22nd, 2018

Market Roundup

  • Saudi Arabia calls Khashoggi killing 'grave mistake,' says prince not aware
     
  • Trump says U.S. to exit landmark nuclear arms pact, Russia threatens retaliation
     
  • With divorce deal almost done, May repeats rejection of EU proposal on Northern Ireland
     
  • Italy expects EU budget rejection on Tuesday -source
     
  • China's Sept new home price gains led by smaller cities
     
  • China banking watchdog says financial risks 'fully controllable' -CSJ
     
  • China releases draft plan for personal income tax deductions
     
  • Australia's Jerusalem ploy fails to avoid by-election beating, risks Muslim backlash
     
  • Australian PM seeks meeting with independent lawmakers in bid to shore-up government
     

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index steadied as investors await the release of the U.S. advance GDP number due later in the week for clarity on the direction of the U.S. dollar. The greenback against a basket of currencies trades 0.1 percent up at 95.69, having touched a high of 96.09 on Friday, its highest since October 9.

EUR/USD: The euro consolidated within a narrow range after rebounding from a 10-day low touched in the previous session, as the Italian government expects the European Commission to decide for the first time ever on Tuesday to ask a member state to revise its draft budget. The European currency traded flat at 1.1515, having touched a low of 1.1433 on Friday, its lowest since October 9. Investors’ attention will remain on the Chicago Fed National Activity Index, amid a lack of economic data from the Eurozone. Immediate resistance is located at 1.1545 (October 10 High), a break above targets 1.1580 (October 17 High). On the downside, support is seen at 1.1432 (October 9 Low), a break below could drag it till 1.1

USD/JPY: The dollar edged up, extending gains for the second straight session, boosted by a hawkish Federal Reserve and signs of continued strength in the U.S. economy. The major was trading 0.1 percent up at 112.59, having hit a high of 112.73 on Thursday, its highest since October 10. Investors’ will continue to track the broad-based market sentiment, ahead of the Chicago Fed National Activity Index. Immediate resistance is located at 112.87 (September 21 High), a break above targets 113.13 (September 26 High). On the downside, support is seen at 112.04 (September 20 Low), a break below could take it lower 111.62 (September 15 Low).

GBP/USD: Sterling nudged up as investors cautiously awaited developments around Brexit. On Sunday, UK Brexit minister Dominic Raab stated that Britain is ready to consider extending the post-Brexit transition period if the European Union drops its proposals for the Irish backstop. The major traded 0.1 percent up at 1.3071, having hit a low of 1.3011 on Friday; it’s lowest since October 5. Immediate resistance is located at 1.3132 (October 8 High), a break above could take it near 1.3182 (October 15 High). On the downside, support is seen at 1.2979 (September 12 Low), a break below targets 1.2941 (October 2 Low). Against the euro, the pound was trading flat at 88.08 pence, having hit a low of 88.32 on Friday, it’s lowest since October 5.

AUD/USD: The Australian dollar declined to a 10-day low amid political uncertainty in Australia, where the ruling Liberal party suffered a major defeat in a by-election that saw the largest swing ever. The Aussie trades 0.2 percent down at 0.7108, having hit a low of 0.7088; it’s lowest since October 11. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7065 (October 4 Low), a break below targets 0.7040 (October 8 Low). On the upside, resistance is located at 0.7148 (October 15 High), a break above could take it near 7223 (September 18 High).

NZD/USD: The New Zealand dollar rose to a 3-week peak as the prospect of more economic stimulus in China supported the outlook for commodity demand. The Kiwi trades 0.05 percent up at 0.6595, having touched a high of 0.6610 earlier, its highest level since October 2. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6628 (October 1 High), a break above could take it near 0.6696 (September 26 High). On the downside, support is seen at 0.6506 (10-DMA), a break below could drag it below 6474 (October 4 Low).

Equities Recap

Asian shares reversed early session losses, as a surge in Chinese stocks offset geopolitical concerns over Saudi Arabia, Italy, and Brexit.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

Tokyo's Nikkei surged 0.4 percent to 22,629.59 points, Australia's S&P/ASX 200 index slumped 0.6 percent to 5,904.90 points and South Korea's KOSPI gained 0.2 percent to 2,159.74 points.

Shanghai composite index rose 4.6 percent to 2,665.59 points, while CSI300 index traded 4.8 percent up at 3,285.63 points.

Hong Kong’s Hang Seng traded 2.3 percent higher at 26,157.35 points. Taiwan shares added 0.5 percent to 9,957.92 points.

Commodities Recap

Crude oil prices surged as markets were expected to tighten once U.S. sanctions against Iran's crude exports are implemented next month. International benchmark Brent crude was trading 0.1 percent up at $79.97 per barrel by 0449 GMT, having hit a low of $78.67 on Thursday, its lowest since September 21. U.S. West Texas Intermediate was trading 0.4 percent up at $69.51 a barrel, after falling as low as $68.50 on Thursday, its lowest since September 14.

Gold prices rose, extending gains for the third straight session amid increasing political tensions and worries over slowing global economic growth. Spot gold was 0.1 percent up at $1,227.74 an ounce at 0442 GMT, having hit a high of $1233.14 last week, its highest since July 26. U.S. gold futures were up 0.2 percent at $1,230.60 an ounce.

Treasuries Recap

The Australian government bonds slumped on the first trading day of the week amid a muted trading session that witnessed data of little economic significance. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 2.717 percent, the yield on the long-term 30-year bond surged nearly 3 basis points to 3.192 percent and the yield on short-term 2-year traded 1 basis point higher at 2.048 percent.

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