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Asia Roundup: Aussie consolidates near 4-month peak, dollar gains against yen as risk appetite improves, investors eye ECB meeting outcome - Thursday, June 4th, 2020

Market Roundup

  • Oil prices fall on doubts over output cuts
     
  • Gold rises on political frictions
     

Economic Data Ahead

  • (0500 ET/0900 GMT) EZ Retail Sales (YoY)(Apr)   
     
  • (0500 ET/0900 GMT) EZ Retail Sales (MoM)(Apr)
     

Key Events Ahead

  • (0745 ET/1145 GMT) ECB Interest Rate Decision   
                 
  • (0745 ET/1145 GMT) ECB Deposit Rate Decision
     

FX Beat

DXY: The dollar index rebounded from an 11-week low, as U.S. services industry activity pushed off an 11-year low in May. The greenback against a basket of currencies traded 0.2 percent up at 97.51, having touched a low of 97.19 on Wednesday, its lowest since March 12.

EUR/USD: The euro declined, halting an 8-day winning streak as a contraction in May economic activity based on the PMIs and the increase in the jobless rate dented investor sentiment. On Wednesday, the major rallied to a 2-1/2 month peak on expectations the European Central Bank would increase its pandemic-related bond purchases later in the day to shore up the coronavirus-stricken economy. The European currency traded 0.1 percent down at 1.1218, having touched a high of 1.1257 the day before, its highest since March 12. Investors’ attention will remain on a series of data from Eurozone economies, EZ retail sales, and ECB interest rate decision, ahead of the U.S. trade balance, nonfarm productivity, unit labor costs and unemployment benefit claims figures. Immediate resistance is located at 1.1285, a break above targets 1.1310. On the downside, support is seen at 1.1189, a break below could drag it below 1.1142 (5-DMA).

USD/JPY: The dollar surged to a near 2-month high on signs of an economic rebound from a coronavirus-led slump. Data released on Wednesday showed U.S. private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen. The major was trading 0.1 percent up at 109.02, having hit a high of 109.10 earlier, its highest since April 7. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, nonfarm productivity, unit labor costs and unemployment benefit claims figures. Immediate resistance is located at 109.40, a break above targets 109.70. On the downside, support is seen at 108.39, a break below could take it near at 108.10 (5-DMA).

GBP/USD: Sterling eased from an over 1-month peak hit in the previous session, after a Reuters poll showed that the British pound will give up its recent gains against the dollar if Britain does not ask for an extension to its Brexit transition period by a June 30 deadline to allow more time for talks on a trade deal with the EU. The major traded 0.3 percent down at 1.2541, having hit a high of 1.2615 on Wednesday, it’s highest since April 30. Investors’ attention will remain on the geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2643, a break above could take it near 1.2706. On the downside, support is seen at 1.2455 (5-DMA), a break below targets 1.2405. Against the euro, the pound was trading 0.2 percent down at 89.46 pence, having hit a low of 90.54 on Friday, it’s lowest since March 27.

AUD/USD: The Australian dollar nudged lower after rallying to a 4-month high the day before on optimism over the reopening of economies around the world. The Aussie trades 0.1 percent down at 0.6909, having hit a high of 0.6982 on Wednesday, it’s highest since Jan 3. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6991, a break above could take it near 0.7031. On the downside, support is seen at 0.6837, a break below targets 0.6782.

Equities Recap

Asian shares rallied to a 2-month high as government stimulus expectations supported investor confidence in an economic recovery from the global coronavirus pandemic.

MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.4 percent.

Tokyo's Nikkei rallied 0.4 percent to 22,709.83 points, Australia's S&P/ASX 200 index surged 0.8 percent to 5,991.80 points. South Korea's KOSPI jumped 0.1 percent to 2,149.50 points.

Shanghai composite index eased 0.1 percent to 2,919.86 points, while CSI 300 index traded 0.05 percent up at 3,983.93 points.

Hong Kong’s Hang Seng traded 0.05 percent higher at 24,334.01 points. Taiwan shares added 0.7 percent to 11,393.23 points.

Commodities Recap

Crude oil prices declined, extending previous session losses, on concern over whether major crude producers will be able to agree to extend record output cuts, heightened by worries over a huge build in U.S. distillate inventories. International benchmark Brent crude was trading 0.5 percent lower at $39.17 per barrel by 0533 GMT, having hit a high of $40.51 on Wednesday, its highest since March 9. U.S. West Texas Intermediate was trading 0.6 percent down at $36.50 a barrel, after rising as high as $38.15 on Wednesday, its highest since March 9.

Gold prices rebounded from a 4-week low hit in the prior session as lingering political tensions and a weaker dollar boosted safe-haven demand. Spot gold surged 0.3 percent to $1,702.44 per ounce by 0537 GMT, having touched a low of $1,689.58 on Wednesday, its lowest since May 7. U.S. gold futures were flat at $1,704.90.

Treasuries Recap

On Wednesday, the yield on the benchmark U.S. 10-year note was up 8.6 basis points at 0.7656 percent, its highest level since April. The two-year U.S. Treasury yield was up 3.2 basis points at 0.1998 percent.

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