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Asia Roundup: Aussie eases following RBA Governor Lowe's comments, dollar index declines ahead of Washington's deadline to impose tariffs on Chinese imports, Asian shares slump - Thursday, July 5th, 2018

Market Roundup

  • China warns U.S. is "opening fire" on global economy with tariff threats
     
  • Australia's central bank closely watching house price falls
     
  • Trump to OPEC: 'Reduce pricing now!' -Twitter
     
  • Irish consumer confidence falls to 13-month low in June
     
  • Philippine c.bank vows to tame inflation as it hits a 5-year high
     
  • Days from Brexit crunch meeting, Britain's May calls for unity
     
  • Carmaker Jaguar says 'bad Brexit' would mean it could not stay in UK

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (0430 ET/0830 GMT) ECB's Peter Praet speaks in Brussels
     
  • (0545 ET/0945 GMT) Bank of England Governor Mark Carney speaks in London
     
  • (1400 ET/1800 GMT)  FOMC will release the minutes from its June 12-13 policy meeting in Washington

FX Beat

DXY: The dollar index tumbled to a fresh 1-week low, as investors remained in a state of anxious uncertainty on the eve of a U.S. deadline to impose tariffs on Chinese imports. The greenback against a basket of currencies trades 0.2 percent down at 94.38, having touched a low of 94.34 earlier, its lowest since June 26. FxWirePro's Hourly Dollar Strength Index stood at -31.20 (Neutral) by 0500 GMT.

EUR/USD: The euro consolidated within narrow ranges amid growing worries about an economic slowdown and political instability in Europe. The European currency traded flat at 1.1665, having touched a high of 1.1719 last week, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at -8.36 (Neutral) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies and ECB Mersch’s speech, ahead of U.S. ADP employment change, unemployment benefit claims, service PMI from both Markit and ISM and FOMC minutes. Immediate resistance is located at 1.1710, a break above targets 1.1744 (June 4 High). On the downside, support is seen at 1.1630 (July 4 Low), a break below could drag it till 1.1600.

USD/JPY: The dollar rose after falling for two straight sessions, as investors braced for a full-scale China-U.S. trade war, Washington is set to implement tariffs on $34 billion of Chinese imports on July 6, while Beijing has vowed to retaliate in the same manner. The major was trading 0.1 percent up at 110.62, having hit a low of 110.28 the day before, its lowest since June 28. FxWirePro's Hourly Yen Strength Index stood at 26.70 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S ADP employment change, unemployment benefit claims, service PMI from both Markit and ISM and FOMC minutes.  Immediate resistance is located at 110.75 (June 21 High), a break above targets 111.08 (June 18 High). On the downside, support is seen at 110.25 (21-DMA), a break below could take it lower 109.68 (June 27 Low).

GBP/USD: Sterling steadied near a 1-week peak as a survey released on Wednesday showed Britain's services industry gained momentum in June, fueling expectations of a Bank of England interest rate rise in August. The major traded 0.1 percent up at 1.3231, having hit a high of 1.3241 the day before; it’s highest since June 26. FxWirePro's Hourly Sterling Strength Index stood at 116.11 (Highly Bullish) 0500 GMT. Investors’ attention will remain on UK Markit service PMI figures, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3270, a break above could take it near 1.3314 (June 22 High). On the downside, support is seen at 1.3168 (5-DMA), a break below targets 1.3102 (June 21 Low). Against the euro, the pound was trading 0.3 percent up at 88.37 pence, having hit a high of 87.99 pence on Wednesday, it’s highest since June 27.

AUD/USD: The Australian dollar eased, extending previous session losses, after Reserve Bank of Australia Governor Philip Lowe highlighted President Donald Trump's protectionism as the single greatest threat to the global outlook. The Aussie trades 0.1 percent down at 0.7377, having hit a low of 0.7310 on Monday; it’s lowest since Jan 2017. FxWirePro's Hourly Aussie Strength Index stood at -138.01 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7345, a break below targets 0.7280. On the upside, resistance is located at 0.7443 (June 22 High), a break above could take it near 0.7480 (June 15 High).

NZD/USD; The New Zealand dollar rallied, extending gains for the third consecutive session, ahead of Washington's deadline to impose tariffs on Chinese imports. The Kiwi trades 0.2 percent up at 0.6772, having touched a low of 0.6687 on Tuesday, its lowest level since May 2016. FxWirePro's Hourly Kiwi Strength Index was at 110.71 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6808 (10-DMA), a break above could take it near 0.6859. On the downside, support is seen at 0.6736 (June 29 Low), a break below could drag it below 0.6700.

Equities Recap

Asian shares declined as investors appeared cautious ahead of the threatened launch of U.S tariffs on China, and the risks that might hold to trade and growth worldwide.

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

Tokyo's Nikkei declined 0.8 percent to 21,546.99 points, Australia's S&P/ASX 200 index gained 0.5 percent to 6,215.50 points, and South Korea's KOSPI plunged 0.4 percent to 2,255.40 points.

Shanghai composite index fell 1.1 percent to 2,730.57 points, while CSI300 index was trading 0.9 percent down at 3,332.03 points.

Hong Kong’s Hang Seng was trading 1.2 percent lower at 27,921.33 points. Taiwan shares shed 1.05 percent to 10,611.81 points.

Commodities Recap

Crude oil prices declined after U.S. President Donald Trump sent a strident tweet demanding that OPEC cut prices for crude. International benchmark Brent crude was trading 0.5 percent down at $77.69 per barrel by 0518 GMT, having hit a high of $79.53 on Friday, its highest since May 31. U.S. West Texas Intermediate was trading 0.7 percent lower at $74.57 a barrel, after rising as high as $75.24 on Tuesday, its highest since Nov. 2014.

Gold prices eased after hitting a 1-week high in the previous session, amid an easing dollar, while investors awaited minutes from the U.S. Federal Reserve's June policy meeting later in the day. Spot gold declined 0.2 percent low at $1,254.88 an ounce as of 0520 GMT, having touched a low of $1237.82 on Tuesday, its lowest since Dec. 12. U.S. gold futures were up 0.3 percent at $1,256.70 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.847 percent higher by 0.01 bps, while 5-year yield was 0.013 bps up at 2.739 percent.

The yields on Australian 10-year paper have fallen 34 basis points since mid-May to stand at 2.60 percent. The three-year bond futures contract was up half a tick at 97.940, having hit its highest since December earlier in the week, while the 10-year contract eased 1 tick to 97.3950.

The New Zealand government bonds were mostly steady.

The Canadian government bond prices were lower across the yield curve, with the two-year down 2.5 Canadian cents to yield 1.909 percent and the 10-year falling 17 Canadian cents to yield 2.158 percent. On Tuesday, the 10-year yield touched its highest intraday level in more than two weeks, at 2.204 percent.

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