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Asia Roundup: Aussie gains as RBA appears bullish on economic outlook, greenback consolidates ahead of U.S. midterm elections, Asian shares edge down - Tuesday, November 6th, 2018

Market Roundup

  • Dollar treads water ahead of U.S. midterm elections, RBA holds steady
     
  • Frost thaws in U.S.-China ties ahead of G20 meeting
     
  • EU to offer Irish border compromise in Brexit talks -The Times
     
  • U.S. reimposes Iran sanctions, Tehran decries 'bullying'
     
  • UK consumer spending edges up after sluggish September - industry data
     
  • S.Korea govt think tank calls for central bank to refrain from rate hikes
     
  • Toyota assuming USD/JPY at 110, EUR/JPY at 130 FY H2
     
  • Australia RBA Cash Rate, 1.50%, 1.50% f'cast, 1.50% prev
     
  • Japan All Household Spending (y/y), -1.6%, 1.6% f'cast, 2.8% prev

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Industrial orders (m/m), -0.6% f'cast, 2.0% prev
     
  • (0345 ET/0845 GMT) Italy Markit/ADACI Svcs PMI, 52.0 f'cast, 53.3 prev
     
  • (0350 ET/0850 GMT) France Markit Serv PMI, 55.6 f'cast, 55.6 prev
     
  • (0350 ET/0850 GMT) France Markit Comp PMI, 54.3 f'cast, 54.3 prev
     
  • (0355 ET/0855 GMT) Germany Markit Services PMI, 53.6 f'cast, 53.6 prev
     
  • (0355 ET/0855 GMT) Germany Markit Comp Final PMI, 52.7 f'cast, 52.7 prev
     
  • (0400 ET/0900 GMT) EZ Markit Serv Final PMI, 53.3 f'cast, 53.3 prev
     
  • (0400 ET/0900 GMT) EZ Markit Comp Final PMI, 52.7 f'cast, 52.7 prev
     
  • (0500 ET/1000 GMT) EZ Producer Prices (y/y), 4.2% f'cast, 4.2% prev
     
  • (0500 ET/1000 GMT) EZ Retail Sales (y/y), 0.7% f'cast, 1.8% prev

Key Events Ahead

  • N/A ECB Vice President Luis de Guindos speaks in Brussels
     
  • (0230 ET/0730 GMT) ECB board members Peter Praet speaks in Brussels
     
  • (0300 ET/0800 GMT) EU finance ministers convene at Brussels
     
  • (0415 ET/0915 GMT) Norway Central Bank Governor Oystein Olsen gives a speech on Oslo
     
  • (0615 ET/1115 GMT) ECB Board Member Benoit Coeure speaks in Brussels
     
  • (0700 ET/1200 GMT) Guest speech by ECB board members Sabine Lautenschlager at Frankfurt
     
  • (1015 ET/1515 GMT) Riksbank Governor Stefan speaks in Stockholm
     

FX Beat

DXY: The dollar index consolidated within narrow ranges as investors counted down to the U.S. midterm vote, the first major electoral test of President Donald Trump's big tax cuts and aggressive trade policies. The greenback against a basket of currencies trades flat at 96.35, having touched a low of 95.99 on Friday, its lowest since October 24. FxWirePro's Hourly Dollar Strength Index stood at 11.35 (Neutral) by 0500 GMT.

EUR/USD: The euro slightly edged down, as Eurozone finance ministers called on Italy overnight to change its 2019 budget to conform with European Union rules before a deadline set for next week. The European currency traded 0.5 percent down at 1.1403, having touched a low of 1.1302 on Wednesday, its lowest since August 15. FxWirePro's Hourly Euro Strength Index stood at 14.05 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies and EZ producer price index, ahead of the U.S. JOLTS Job Opening data. Immediate resistance is located at 1.1432 (October 25 High), a break above targets 1.1476 (October 24 High). On the downside, support is seen at 1.1371 (5-DMA), a break below could drag it till 1.1302 (October 31 Low).

USD/JPY: The dollar rallied to a 1-month peak, as the U.S. congressional election is widely expected to boost the Democratic Party, which has a strong probability of winning control of the House of Representatives, with Republicans seen likely to keep the Senate. The major was trading 0.2 percent up at 113.41, having hit a high of 113.41, its highest since October 8. FxWirePro's Hourly Yen Strength Index stood at -119.87 (Highly Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS Job Opening data. Immediate resistance is located at 113.71 (September 28 High), a break above targets 114.10 (October 5 High). On the downside, support is seen at 112.35 (October 22 Low), a break below could take it lower 112.01 (October 17 Low).

GBP/USD: Sterling surged to a 2-week peak after a media report suggested the European Union and Britain may be inching closer to an orderly Brexit. The major traded 0.1 percent up at 1.3053, having hit a low of 1.3067 earlier; it’s highest since October 22. FxWirePro's Hourly Sterling Strength Index stood at 48.62 (Neutral) 0500 GMT. Investors attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.3103 (October 19 High), a break above could take it near 1.3192 (October 17 High). On the downside, support is seen at 1.2936 (October 23 Low), a break below targets 1.2867 (October 24 Low). Against the euro, the pound was trading 0.1 percent up at 87.35 pence, having hit a high of 87.30, it’s highest since October 11.

AUD/USD: The Australian dollar rose, extending previous session gains, after the Reserve Bank of Australia left rates at 1.50 percent in a widely expected move and signalled policy will stay there for some while yet, but painted a bullish economic outlook. The Aussie trades 0.2 percent up at 0.7223, having hit a high of 0.7258 on Friday; it’s highest since September 27. FxWirePro's Hourly Aussie Strength Index stood at 103.01 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7164 (October 13 Low), a break below targets 0.7112 (October 16 Low). On the upside, resistance is located at 0.7275 (September 19 High)., a break above could take it near 0.7300.

NZD/USD: The New Zealand dollar consolidated within narrow ranges, ahead of the country's third-quarter employment report, which would provide some indication on the health of the economy. The Kiwi trades flat at 0.6661, having touched a high of 0.6689 on Friday, its highest level since September 26. FxWirePro's Hourly Kiwi Strength Index was at 71.69 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6727 (August 28 High), a break above could take it near 0.6750. On the downside, support is seen at 6599 (October 1 Low), a break below could drag it below 6560.

Equities Recap

Asian shares declined, weighed down by a fall in and Chinese stocks and technology shares, while the greenback consolidated within narrow ranges ahead of the U.S. midterm elections.

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

Tokyo's Nikkei rose 1.2 percent to 22,147.75 points, Australia's S&P/ASX 200 index gained 0.9 percent to 5,875.20 points and South Korea's KOSPI surged 0.5 percent to 2,086.43 points.

Shanghai composite index fell 0.5 percent to 2,652.61 points, while CSI300 index traded 0.9 percent down at 3,234.47 points.

Hong Kong’s Hang Seng traded 0.1 percent higher at 25,964.92 points. Taiwan shares shed 0.6 percent to 9,824.95 points.

Commodities Recap

Crude oil prices surged, despite exemptions from Washington that will allow Iran's biggest oil customers to keep buying from Tehran. International benchmark Brent crude was trading 0.3 percent up at $72.85 per barrel by 0538 GMT, having hit a low of $72.56 on Friday, its lowest since August 21. U.S. West Texas Intermediate was trading 0.5 percent up at $62.95 a barrel, after falling as low as $62.56 on Monday, its lowest since April 9.

Gold prices declined as the dollar strengthened, while investors awaited U.S. midterm election results for market direction. Spot gold was 0.1 percent down at $1,229.85 per ounce at 0542 GMT, having touched a low of $1,211.87 on Wednesday, its lowest since Oct. 11. U.S. gold futures fell 0.2 percent to $1,230.5 per ounce.

Treasuries Recap

The Japanese government bonds traded mixed after the country’s household spending deteriorated during the month of September and investors will now be eyeing the Bank of Japan’s (BoJ) Summary of Opinions, scheduled to be released later in the week for further direction in the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped 13 basis points to 0.131 percent, the yield on the long-term 30-year note hovered around 0.889 percent and the yield on short-term 2-year slumped nearly 13 basis points to -0.128 percent.

The Australian government bonds held gains across the curve during Asian session as investors’ preferred safe-haven buying after the Reserve Bank of Australia (RBA) left its monetary policy unchanged for the record 27th straight month despite weak inflation and falling house prices.The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.726 percent, the yield on the long-term 30-year bond also dipped 1-1/2 basis points to 3.254 percent and the yield on short-term 2-year down 1-1/2 basis points to 2.044 percent.

The Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 13 Canadian cents to yield 2.518 percent.

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