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Asia Roundup: Aussie eases following RBA minutes release, greenback gains on U.S.-China trade deal optimism, Asian shares consolidate - Tuesday, February 19th, 2019

Market Roundup

  • New round of U.S.-China trade talks to begin in Washington on Tuesday
     
  • U.S. states sue Trump administration in showdown over border wall funds
     
  • U.S. Deputy Attorney General Rosenstein to step down in March - official
     
  • Auto industry lines up against possible U.S. tariffs
     
  • Australia's central bank sounds alarm on housing slide, rate cut in play
     
  • Japan business mood sours, outlook weakens further - Reuters Tankan
     
  • BoJ Gov Kuroda: Will mull easing policy further if FX moves hurt economy, prices and threaten achievement of price goal
     
  • UK manufacturers warn of "catastrophic" no-deal Brexit
     
  • 'Wake up', Macron will tell Europe in major pre-Brexit speech -sources
     

Economic Data Ahead

  • (0430 ET/0930 GMT) Great Britain Dec ILO Unemployment Rate, 4.0% f’cast, 4.0% prev
     
  • (0430 ET/0930 GMT) Great Britain Jan Claimant Count Unem Chng, 20.8k prev
     
  • (0430 ET/0930 GMT) Great Britain Dec Employment Change, 140k f’cast, 141k prev
     
  • (0430 ET/0930 GMT) Great Britain Dec Avg Wk Earnings 3M YY, 3.5% f’cast, 3.4% prev
     
  • (0430 ET/0930 GMT) Great Britain Dec Avg Earnings (Ex-Bonus), 3.4% f’cast, 3.3% prev
     
  • (0500 ET/1000 GMT) Germany Feb ZEW Economic Sentiment, -14.0 f’cast, -15.0 prev
     
  • (0500 ET/1000 GMT) Germany Feb ZEW Current Conditions, 23.0 f’cast, 27.6 prev
     

Key Events Ahead

  • (0200 ET/0700 GMT) Philippines Central Bank Deputy Governor Diwa Guinigundo speaks at a seminar in Tokyo
     
  • (0515 ET/1015 GMT) ECB Vice-President Luis de Guindos participates at a panel session in Brussels
     
  • (0850 ET/1350 GMT) Cleveland Fed President Loretta Mester to speaks on the economic outlook and monetary policy in Newark
     
  • (1000 ET/1500 GMT) ECB Chief Economist Peter Praet participates in a panel discussion at a conference in Berlin
     
  • (1230 ET/1730 GMT) Riksbank Governor Stefan Ingves speaks about the economic situation and current monetary policy in New York
     

FX Beat

DXY: The dollar index rebounded, halting a 3-day losing streak, as reports of progress in trade talks between the United States and China prompted investors to be optimistic that both the economies can reach a compromise by March 1. The greenback against a basket of currencies trades 0.1 percent up at 96.89, having touched a high of 97.37 on Friday, its highest since December 17. FxWirePro's Hourly Dollar Strength Index stood at -52.26 (Bearish) by 0400 GMT.

EUR/USD: The euro declined below the 1.3000 handle, as investors expect the ECB policymakers to slash growth and inflation projections as the eurozone suffers its biggest slowdown in half a decade.  The European currency traded 0.1 percent down at 1.1296, having touched a low of 1.1234 on Friday, its lowest since Nov. 13. FxWirePro's Hourly Euro Strength Index stood at -24.84 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone current account data, construction output figures and ECB Praet's speech ahead of the U.S. housing market index. Immediate resistance is located at 1.1341 (Feb. 13 High), a break above targets 1.1368 (Feb.7 High).. On the downside, support is seen at 1.1216 (Nov. 13 Low), a break below could drag it till 1.1180.

USD/JPY: The dollar rose, extending previous session gains as investor risk sentiment improved on increasing expectations for an easing in the U.S.-China trade conflict after both sides reported progress in talks. The major was trading 0.1 percent up at 110.65, having hit a high of 111.12 on Thursday, its highest since December 27. FxWirePro's Hourly Yen Strength Index stood at -62.91 (Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing market index. Immediate resistance is located at 111.05 (Feb. 13 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 110.28 (10-DMA), a break below could take it lower at 109.60 (Feb. 7 Low).

GBP/USD: Sterling eased, reversing some of its previous session after seven politicians quit Britain's opposition Labour Party on Monday in protest against Jeremy Corbyn's leadership. The major traded 0.2 percent down at 1.2898, having hit a low of 1.2772 on Thursday; it’s lowest since January 15. FxWirePro's Hourly Sterling Strength Index stood at -1.61 (Neutral) 0400 GMT. Investors’ attention will remain on developments surrounding Brexit deal and UK labour data, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2958 (Feb. 18 High), a break above could take it near 1.2996 (February 7 High). On the downside, support is seen at 1.2845 (Feb 11 Low), a break below targets 1.2766 (Nov 22 Low). Against the euro, the pound was trading 0.1 percent down at 87.56 pence, having hit a high of 87.42 on Monday, it’s highest since Feb. 8.

AUD/USD: The Australian dollar tumbled after the minutes of the Reserve Bank of Australia's first policy meeting of the year in February showed that the central bank saw significant uncertainties on the economy that supported the case of rate cuts. The Aussie trades 0.2 percent down at 0.7112, having hit a high of 0.7160 on Monday; it’s highest since February 6. FxWirePro's Hourly Aussie Strength Index stood at 61.62 (Bullish) by 0400 GMT. Immediate support is seen at 0.7089 (Feb. 7 Low), a break below targets 0.7044 (Dec. 26 Low). On the upside, resistance is located at 0.7166 (January 24 High), a break above could take it near 0.7203 (January 28 High).

NZD/USD: The New Zealand dollar edged lower, as crude oil prices drifted away from 2019 highs amid caution that economic growth may dent fuel demand this year. The Kiwi trades 0.2 percent down at 0.6832, having touched a high of 0.6893 on Monday, its highest level Feb. 6. FxWirePro's Hourly Kiwi Strength Index was at 93.98 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data.  Immediate resistance is located at 0.6911 (Dec. 11 High), a break above could take it near 0.6941 (Feb. 1 High). On the downside, support is seen at 0.6797 (10-DMA), a break below could drag it below 0.6766 (Feb. 6 Low).

Equities Recap

Asian shares consolidated near 4-month highs, supported by hopes that U.S.-China trade talks were making progress.

MSCI's broadest index of Asia-Pacific shares outside Japan nudged higher.

Tokyo's Nikkei gained 0.1 percent to 21,308.70 points, Australia's S&P/ASX 200 index surged 0.3 percent to 6,106.90 points and South Korea's KOSPI fell 0.2 percent to 2,207.68 points.

Shanghai composite index declined 0.3 percent to 2,746.08 points, while CSI300 index traded 0.4 percent down at 3,432.25 points.

Hong Kong’s Hang Seng traded 0.2 percent lower at 28,282.16 points. Taiwan shares added 0.1 percent to 10,152.26 points.

Commodities Recap

Crude oil prices drifted away from 2019 highs amid caution that economic growth may dent fuel demand this year, although supply cuts led by producer cartel OPEC limited downside. International benchmark Brent crude was trading 0.4 percent down at $66.20 per barrel by 0416 GMT, having hit a high of $66.81 on Monday, its highest since November 20. U.S. West Texas Intermediate was trading 0.4 percent lower at $55.80 a barrel, after rising as high as $56.32 on Monday, its highest since the November 20.

Gold prices edged lower after rising to its strongest since April in the previous session as investor sentiment improved amid increasing expectations for an easing of the U.S.-China trade conflict. Spot gold declined 0.1 percent to $1,324.51 per ounce, having touched a high of $1,327.52 on Monday, its highest level since April 25. U.S. gold futures rose 0.6 percent to $1,329.70.

Treasuries Recap

The Japanese government bond prices were capped firmly, with the 10-year JGB yield unchanged at minus 0.025 percent, while the 20-year yield edged up half a basis point to 0.420 percent. The 30-year yield was half a basis point higher at 0.595 percent.

The Australian government bond futures inched up in the wake of the minutes, with the three-year bond contract rising half a tick to 98.320. The 10-year contract also added half a tick to 97.8700.

The New Zealand government bonds slipped a touch with yields up as much as 2 basis points at the far end of the curve.

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449.6 Stale

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