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Asia Roundup: Aussie gains on China's better-than-expected trade surplus, greenback eases on economic recovery concerns, Asian shares consolidate - Monday, September 7th, 2020

Market Roundup

  • Oil declines after Saudi price cuts
     
  • Gold gains as dollar eases from 1-week peak
     
  • China's August yuan-denominated exports rise 11.6 percent yoy
     
  • China's August yuan-denominated imports decline 0.5 percent yoy

Economic Data Ahead

  • (0430 ET/0830 GMT) EZ Sentix Investor Confidence(Sep)

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index eased after rising to a 1-week peak in the prior session as data released last week showed U.S. employment growth slowed further in August and permanent job losses increased, raising doubts on the sustainability of the economy's recovery from the COVID-19 recession. The greenback against a basket of currencies traded 0.05 percent down at 92.92, having touched a high of 93.24 on Friday, its highest since August 27.

EUR/USD: The euro declined, extending losses for the fifth straight session, ahead of the European Central Bank's policy decision on Thursday. Markets don't expect a shift in policy stance but are focusing on the message the ECB will deliver on its inflation forecast. The European currency traded 0.05 percent lower at 1.1835, having touched a low of 1.1835 on Friday, its lowest since August 27. Investors’ attention will remain on a series of data from the Eurozone economies, and EZ Sentix Investor Confidence, as U.S. markets remain closed on account of Labour Day. Immediate resistance is located at 1.1877 (5-DMA), a break above targets 1.1902. On the downside, support is seen at 1.1802, a break below could drag it below 1.1762.

USD/JPY: The dollar surged as risk sentiment improved following the release of upbeat Chinese trade balance data. China's exports rose for the third consecutive month in August, while imports extended fall, as more of its trading partners relaxed coronavirus lockdowns in a further boost to the economy's recovery.  The major was trading 0.1 percent up at 106.30, having hit a high of 106.55 on Thursday, its highest since August 28. Investors’ will continue to track the broad-based market sentiment, as U.S. financial markets are closed for the Labour Day holiday. Immediate resistance is located at 106.57, a break above targets 106.70. On the downside, support is seen at 106.00, a break below could take it near at 105.74.

GBP/USD: Sterling declined, hovering towards an over 1-week low hit in the previous session, amid an EU-UK trade negotiations impasse. The prospects of a no-deal Brexit has increased sharply as negotiations have been threatened by Britain's insistence that it has full autonomy over its state aid plans. The major traded 0.4 percent down at 1.3227, having hit a low of 1.3175 on Friday, it’s lowest since August 27. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3331 (5-DMA), a break above could take it near 1.3381. On the downside, support is seen at 1.3176 (21-DMA), a break below targets 1.3151. Against the euro, the pound was trading 0.4 percent down at 89.48 pence, having hit a high of 88.65 on Thursday, it’s highest since June 9.

AUD/USD: The Australian dollar gained after data showed China's exports in August rose 9.5 percent from a year earlier, while imports decreased 2.1 percent on year, which put the trade surplus last month at $58.93 billion, compared with the poll's forecast for a $50.50 billion surplus. The Aussie trades 0.05 percent higher at 0.7285, having hit a low of 0.7222 on Friday, it’s lowest since August 27. Immediate resistance is located at 0.7327 (5-DMA), a break above could take it near 0.7350. On the downside, support is seen at 0.7253, a break below targets 0.7226 (21-DMA).

NZD/USD: The New Zealand dollar slumped, reversing most of its previous session gains, as the country's central bank Governor Adrian Orr signaled his intent to continue to loosen monetary policy as required, saying he’s determined to head off unnecessarily low inflation or even deflation. The Kiwi trades 0.2 percent lower at 0.6701, having touched a low of 0.6716 on Friday, its lowest level since August 28. Immediate resistance is located at 0.6744, a break above could take it near 0.6763. On the downside, support is seen at 0.6676 (10-DMA), a break below could drag it below 0.6651.

Equities Recap

Asian shares edged lower as optimism about global economic recovery faded due to a deep coronavirus-induced recession.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.05 percent.

Tokyo's Nikkei fell 0.5 percent to 23,104.21 points, Australia's S&P/ASX 200 index rose 0.2 percent to 5,936.90 points. South Korea's KOSPI gained 0.5 percent to 2,381.65 points.

Shanghai composite index declined 0.6 percent to 3,335.67 points, while CSI 300 index traded 0.8 percent down at 4,732.01 points.

Hong Kong’s Hang Seng traded 0.05 percent lower at 24,692.31 points. Taiwan shares shed 0.3 percent to 12,601.40 points.

Commodities Recap

Crude oil prices declined, hitting their lowest since July, after Saudi Arabia made the deepest monthly price cuts for supply to Asia in five months. International benchmark Brent crude was trading 0.3 percent down at $42.21 per barrel by 0444 GMT, having hit a low of $41.64 earlier, its lowest since July 30. U.S. West Texas Intermediate was trading 0.4 percent lower at $39.26 a barrel, after falling as low as $38.58 earlier, its lowest since July 10.

Gold prices nudged higher as the dollar eased from 1-week, with weak economic data out of the United States at the end of last week raising fears over the global economic recovery from the COVID-19 slump. Spot gold was trading 0.1 percent higher at $1,935.84 per ounce by 0450 GMT, having hit a low of $1916.69 on Friday, its lowest since August 27. U.S. gold futures rose 0.4 percent to $1,941.10.

Treasuries Recap

The U.S. Treasury yields rebounded, with the benchmark 10-year note yield trading at 0.721 percent.

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