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Asia Roundup: Antipodeans surge on mixed Chinese economic data, greenback tumbles as weak U.S. retail sales support Fed rate cut expectations, Asian shares decline - Friday, October 18th, 2019

Market Roundup

  • China posts slowest GDP growth in almost three decades
     
  • China Retail sales rose 7.8% year-on-year in September
     
  • China Fixed asset investment grew 5.4% from January-September
     

Economic Data Ahead

  • (0400 ET/0800 GMT) EZ Current Account s.a. August
     
  • (0400 ET/0800 GMT) EZ Current Account n.s.a. August

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index steadied after falling to a near 2-month low in the prior session on weak U.S. retail sales data that supported the case for further interest rate cuts by the Federal Reserve.  The greenback against a basket of currencies traded 0.05 percent up at 97.61, having touched a low of 97.50 on Thursday, its lowest since August 26.

EU/USD: The euro consolidated near an 8-week peak hit in the previous session after the German government said it lowered its 2020 forecast for economic growth to 1.0 percent from 1.5 percent previously but added that the economy was not facing a crisis. The European currency traded flat at 1.1124, having touched a high of 1.1139 on Thursday, its highest since August 26. Investors’ attention will remain on EZ current account, ahead of Fed officials' speeches. Immediate resistance is located at 1.1150, a break above targets 1.1187. On the downside, support is seen at 1.1016, a break below could drag it below 1.1051.

USD/JPY: The dollar declined, extending losses for the third straight session after data showed U.S. homebuilding tumbled from a more than a 12-year high in September, while separate data showed a deceleration in factory activity in the mid-Atlantic region in October. The major was trading 0.1 percent down at 108.55 having hit a high of 108.93 on Wednesday, its highest since August 1. 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 108.37, a break below could take it near at 108.02.

GBP/USD: Sterling declined after rising to a 5-month peak in the previous session on news that Britain’s Prime Minister Boris Johnson and European Union leaders agreed a new deal for Britain to exit the bloc. The major traded 0.2 percent down at 1.2861, having hit a high of 1.2989 on Thursday, 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 1.3000, a break above could take it near 1.3040. On the downside, support is seen at 1.2800, a break below targets 1.2749 (5-DMA). Against the euro, the pound was trading 0.3 percent down at 86.51 pence, having hit a high of 85.74 the day before, it’s highest since May 8.

AUD/USD: The Australian dollar rallied to a 1-month peak after jobs data showed buoyant hiring, lowering chances of monetary easing in November. Moreover, data showing Chinese retail sales rose 7.8 percent year-on-year in September, in line with expectations of 7.8 percent growth, while fixed-asset investment grew 5.4 percent from January-September further supported the bid tone around the pair. The Aussie trades 0.1 percent up at 0.6830, having hit a high of 0.6838 earlier, it’s highest since September 18. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6811, a break below targets 0.6753. On the upside, resistance is located at 0.6848, a break above could take it near 0.6875.

NZD/USD: The New Zealand dollar surged to a 1-month high on the back of better-than-expected Chinese retail sales, fixed asset investment and industrial production figures. The Kiwi trades 0.4 percent up at 0.6369, having touched a high of 0.6376 earlier, its highest level since September 16. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6391 (September 16 High), a break above could take it near 0.6409 (September 13 High). On the downside, support is seen at 0.6295, a break below could drag it below 0.6255.

Equities Recap

Asian shares declined, erasing earlier gains after China posted its weakest growth in nearly three decades.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent.

Tokyo's Nikkei gained 0.2 percent to 22,492.68 points, Australia's S&P/ASX 200 index declined 0.5 percent to 6,649.70 points and South Korea's KOSPI fell 0.8 percent to 2,060.69 points.

Shanghai composite index declined 1.3 percent to 2,937.82 points, while CSI 300 index traded 1.4 percent down at 3,869.60 points.

Hong Kong’s Hang Seng traded 0.5 percent lower at 26,712.37 points. Taiwan shares shed 0.1 percent to 11,180.22 points.

Commodities Recap

Crude oil prices declined after data showed China recorded its weakest quarter of economic growth in nearly three decades, dragged down by a trade dispute with the United States. International benchmark Brent crude was trading 0.5 percent down at $59.53 per barrel by 0502 GMT, having hit a high of $60.66 last week, its highest since September 30. U.S. West Texas Intermediate was trading 0.4 percent lower at $53.84 a barrel, after rising as high as $54.91 last week, its highest since September 30.

Gold prices consolidated within narrow ranges after Britain managed to agree on a deal for its exit from the European Union. Spot gold was trading flat at $1,491.47 an ounce by 0505 GMT, having touched a low of $1,473.88 last week, its lowest since October 1. U.S. gold futures shed 0.2 percent to $1,495.40 per ounce.

Treasuries Recap

The Japanese government bond prices slipped, wit the 20-year JGB yield rising 1 basis point to 0.230 percent, while the 40-year JGB yield rose 0.5 basis point to 0.435 percent. At the shorter end, the 10-year JGB yield rose 0.5 basis point to minus 0.155 percent. The benchmark 10-year JGB futures fell 0.04 point to 154.26, on course for its six consecutive day of losses.

The Australian government bonds remained flat during Asian session of the last trading day of the week Friday amid otherwise muted hours that witnessed data of little economic significance. However, market sentiments remained upbeat following the breakthrough Brexit deal, which will smoothen the roadmap to the final exit of Britain from the European Union. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.103 percent, the yield on the long-term 30-year bond also remained flat at 1.689 percent and the yield on short-term 2-year too traded steady at 0.770 percent.

By Lactus Fernandes
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