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Asia Roundup: Antipodeans steady near recent lows, greenback firms at 19-month peak amid mounting risks to global growth, Asian shares nudge lower - Monday, December 17th, 2018

Market Roundup

  • New Brexit vote would 'break faith' with British, says May
     
  • UK consumer spending falls by most since July in run-up to Brexit – Visa data
     
  • Asking prices for UK homes show biggest 2-month fall in 6 years-Rightmove
     
  • China cenbank says to guide credit, social financing growth as economic challenges rise
     
  • China's Nov home price growth slows as smaller cities cool
     
  • Japan Inc's inflation expectations nudge higher before BOJ meeting
     
  • Embattled Australian govt forecasts budget "war chest" ahead of tough 2019 election
     
  • Canada says China has granted consular access to second detainee
     
  • 'Positive surprise': Investors soothed by Mexico budget
     
  • Italy coalition in agreement on budget figures
     
  • French PM predicts budget deficit at 3.2 pct of GDP in 2019-Les Echos
     

Economic Data Ahead

  • (0400 ET/0900 GMT) EZ Nov HICP Final Y/Y, 2.0% f'cast, 2.0% prev
     
  • (0400 ET/0900 GMT) EZ Nov HICP-X F,E,A&T Final Y/Y, 1.0% f'cast, 1.0% prev
     
  • (0400 ET/0900 GMT) Italy Oct Trade Balance EU, 1.183B prev
     

Key Events Ahead

  • (0400 ET/0900 GMT) French Central Bank Deputy Governor Sylvie Goulard speaks about a regular report on risks to the French financial system in Paris.

FX Beat

DXY: The dollar index held firm near a 19-month peak, as the Federal Reserve is expected to raise interest rates by 25bp this week, but it may also remove guidance and slightly reduce the near-term dots.  The greenback against a basket of currencies trades flat at 97.42, having touched a high of 97.71 on Friday, its highest since June 2017. FxWirePro's Hourly Dollar Strength Index stood at 132.66 (Highly Bullish) by 0500 GMT.

EUR/USD: The euro steadied after falling to an over 2-week low in the previous session on weaker-than-expected data out of France and Germany, indicating that economic activity in Europe remains weak. The European currency traded flat at 1.1370, having touched a low of 1.1270 on Friday, its lowest since Nov. 28. FxWirePro's Hourly Euro Strength Index stood at -37.12 (Neutral) by 0500 GMT. Investors’ attention will remain on the Eurozone trade balance and consumer price index, ahead of the U.S. housing market index and New York empire state manufacturing. Immediate resistance is located at 1.1361 (December 5 High), a break above targets 1.1401 (November 29 High). On the downside, support is seen at 1.1267 (November 28 Low), a break below could drag it till 1.1215 (November 12 Low).

USD/JPY: The dollar edged higher as the Federal Reserve is set to raise interest rates by 25 basis points at its two-day meeting that opens Tuesday. However, investors expect the Fed to lower its projections for future interest rate hikes given increasing headwinds to the economy. The major was trading 0.1 percent up at 113.51, having hit a high of 113.70 on Thursday, its highest since December 3. FxWirePro's Hourly Yen Strength Index stood at 31.36 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing market index and New York empire state manufacturing. Immediate resistance is located at 113.72 (November 30 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 113.18 (November 29 Low), a break below could take it lower 112.66 (October 23 Low).

GBP/USD: Sterling consolidated below the 1.2600 handle, as investors remained on the sidelined after British Trade Minister Liam Fox on Sunday stated that talks with the European Union to secure assurances for parliament on Prime Minister Theresa May's Brexit deal will take time. The major traded flat at 1.2582, having hit a low of 1.2476 on Wednesday; it’s lowest since mid-April 2017. FxWirePro's Hourly Sterling Strength Index stood at 37.53 (Neutral) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2670 (Dec. 13 High), a break above could take it near 1.2754. On the downside, support is seen at 1.2560, a break below targets 1.2515. Against the euro, the pound was trading 0.1 percent down at 89.86 pence, having hit a low of 90.87 last week, it’s lowest since August 29.

AUD/USD: The Australian dollar treaded water near a 1-1/2 month low amid increasing worries about slowing growth in China and globally. Investors now await the Reserve Bank of Australia's (RBA) Meeting Minutes for further clues on the country's monetary policy. The Aussie trades 0.05 percent down at 0.7171, having hit a low of 0.7151 on Friday; it’s lowest since November 1. FxWirePro's Hourly Aussie Strength Index stood at -146.89 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7141(September 17 Low), a break below targets 0.7100. On the upside, resistance is located at 0.7212 (November 1 High), a break above could take it near 0.7268 (November 22 High).

NZD/USD: The New Zealand dollar held firm near a 3-week low, amid fears of a global economic slowdown, while the market focused on the likely trajectory of U.S. monetary policy. The Kiwi trades 0.1 percent up at 0.6797, having touched a low of 0.6777 on Friday, its lowest level Nov 27. FxWirePro's Hourly Kiwi Strength Index was at -115.51 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6834 (November 22 High), a break above could take it near 0.6883 (November 16 High). On the downside, support is seen at 0.6753 (November 27 Low)., a break below could drag it below 0.6727 (November 9 Low).

Equities Recap

Asian shares declined as soft economic data from China and Europe reflected a worsening global economic outlook and reinforced concerns over the broadening impact of the international trade dispute.

MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.1 percent.

Tokyo's Nikkei rose 0.6 percent to 21,506.88 points, Australia's S&P/ASX 200 index gained 1.0 percent to 5,658.30 points and South Korea's KOSPI surged 0.1 percent to 2,071.71 points.

Shanghai composite index fell 0.2 percent to 2,589.25 points, while CSI300 index traded 0.5 percent down at 3,151.62 points.

Hong Kong’s Hang Seng traded 0.05 percent lower at 26,091.66 points. Taiwan shares shed 0.1 percent to 9,787.53 points.

Commodities Recap

Crude oil prices edged up, after U.S. drilling activity declined to its lowest level in about two months, however, concerns over demand in the wake of weaker growth in major economies limited gains. International benchmark Brent crude was trading 0.2 percent up at $60.37 per barrel by 0439 GMT, having hit a high of $63.67 on Dec. 7, its highest since November 22. U.S. West Texas Intermediate was trading 0.4 percent up at $51.36 a barrel, after rising as high as $54.20 on Dec. 7, its highest since the December 5.

Gold prices declined as the greenback surged ahead of a U.S. Federal Reserve meeting this week. Spot gold eased 0.1 percent to $1,237.13 per ounce by 0503 GMT, having touched a low of $1,232.82 on Friday, its lowest level since Dec. 4. U.S. gold futures were down 0.1 percent at $1,239.3 per ounce.

Treasuries Recap

The Japanese government bonds gained on the first trading day of the week Monday as investors wait to watch the country’s trade balance data for the month of November, scheduled to be released on November 18 by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 7 basis points to 0.033 percent, the yield on the long-term 30-year note suffered by nearly 1-1/2 basis points to 0.771 percent and the yield on short-term 2-year lost nearly 2basis points to -0.148 percent.

The Australian government bonds gained across the curve during Asian session Monday as investors remain cautious amid slowing global economic growth. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 2 basis points to 2.448 percent, the yield on the long-term 30-year bond also dipped 2-1/2 basis points to 2.960 percent and the yield on short-term 2-year down 1 basis point to 1.986 percent.

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