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Asia Roundup: Aussie falls noticeably against U.S. dollar, hits fresh 11-month low at $0.7424; Asian markets mixed, gold slips below $1,310 mark - Wednesday, May 09, 2018

Market Roundup

  • As Trump pulls out of Iran deal, Asia grapples with impact on oil supplies.
     
  • China, Japan and S. Korea highlight unity amid N. Korea moves.
     
  • Pompeo, in North Korea, to return with detained Americans – South Korean official.
     
  • Japan March real wages +0.8% y/y, total cash earnings +2.1%, best since June ’03.
     
  • Japan Overtime pay also +1.8% y/y, all positive signs for consumption.
     
  • Japan End-April foreign reserves $1.256 trln, end-March $1.268 trln.

Economic Data Ahead

  • (0245 ET/0645 GMT) France March Industrial Output MM, forecast 0.4%, last 1.2%.
     
  • (0400 ET/0800 GMT) Italy March Retail Sales SA MM, last 0.40%.
     
  • (1901 ET/2301 GMT) UK April RICS Housing Survey, forecast -1, last 0.

Key Events Ahead

  • (1315 ET/1715 GMT) Fed's Bostic speaks in Jacksonville.
     
  • (1950 ET/2350 GMT) BOJ to release summary of opinions from board members at its April 26-27 policy meeting.

FX Recap

USD: The dollar index, which measures the greenback against a basket of six major currencies, was up 0.1 percent at 93.199.

EUR/USD: The euro falls below $1.1838; hits lowest level since late December. The euro, already under pressure from weak economic indicators and widening U.S. - euro zone interest rate differentials, was also hit by political developments in Italy. A consistent close below $1.1863 will drag the parity down towards key support around $1.1745 levels. Alternatively, reversal from key support will take the parity higher towards key resistances around $1.1992, $1.2240, $1.2345 and $1.2482 marks respectively.

USD/JPY: The Japanese yen trades marginally lower against U.S. dollar as crude oil prices rallied and pushed Treasury yields higher after U.S. President Donald Trump pulled out from an international nuclear deal with Iran. It made intraday high at 109.63 and low at 108.99 levels. A sustained close above 109.82 is required to take the parity higher towards key resistance around 112.96 marks. Alternatively, a daily close below 108.80 will drag the parity down towards key supports around 108.54, 106.71 and 105.32 marks respectively.

GBP/USD:  The sterling traded at $1.3525 following a decline to a four-month low of $1.3485 overnight. The pound has fallen heavily in recent weeks on expectations the BoE would not, as earlier believed, tighten monetary policy because of a relatively weak economy and as investors piled into a rallying dollar. On the top side key resistance was seen at $1.3665 and support was seen at $1.3302 mark.

AUD/USD: The Australian dollar extended its overnight slide to touch an 11-month low of $0.7424. Intraday bias remains bearish till the time pair holds key resistance at $0.7542 mark. Alternatively current downside movement will take the parity down towards key supports around $0.7328 and $0.7159 marks respectively.

NZD/USD: The kiwi dollar was near its lowest since December at $0.6953, having again lost four cents since mid-April. Support lies around $0.6816 and $0.6759 levels respectively with resistance at $0.7120. Intraday bias remains neutral for the moment.  

Equities Recap

Japan’s Nikkei was trading 0.35 pct lower at 22,430.55 points.

South Korea’s Kospi was trading 0.05 pct lower at 2,448 points.

Shanghai composite index to open flat at 3,160.14 points and China's CSI300 index to open down 0.1 pct at 3,876.13 points.

Australia's S&P/ASX 200 index was up 0.27 pct at 6,108.50 points in early trade.

Hong Kong’s Hang seng was trading 0.46 pct higher at 30,542.50 points.

Taiwanese stock was trading around 0.25 percent higher at 10,717.75 points.

India’s NSE Nifty was trading around 0.13 percent higher at 10,731.80 points while BSE Sensex was trading 0.18 points higher at 35,279.88 points.

Commodities Recap

Oil prices rose more than 2 percent on Wednesday, with Brent hitting a 3-1/2-year high, after U.S. President Donald Trump abandoned a nuclear deal with Iran, likely curbing the OPEC member's crude exports in an already tight market. Brent crude oil futures rose to a session high of $76.75 per barrel, their highest since November 2014. They were still at $76.73 per barrel at 0344 GMT, up $1.88, or 2.5 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were up $1.61 per barrel, or 2.3 percent, at $70.67 a barrel, close to highs also last seen in late 2014.

Gold prices slipped in early trade on Wednesday, as the dollar regained ground after briefly dipping earlier following U.S. President Donald Trump's decision to pull out of the Iran nuclear deal. Spot gold fell 0.2 percent to $1,311.81 per ounce at 0111 GMT. U.S. gold futures for June delivery slipped 0.1 percent to $1,312.40 per ounce.

Treasuries Recap

New Zealand government bonds slipped in line with U.S. Treasuries, nudging yields up as much as 4 basis points.

Australian government bond futures also eased, with the three-year bond contract off 2 ticks at 97.785. The 10-year contract fell 5 ticks to 97.1950.

10-year U.S. treasury yield was at 2.991 percent vs U.S. close of 2.968 percent on Tuesday.

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