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Asia Roundup: Aussie near 1-month peak as retail sales surge, greenback eases after Fed's Powell reiterates dovish policy outlook, Asian shares rally - Friday, January 11th, 2019

Market Roundup

  • U.S. expects China's top trade negotiator to visit 'most likely' this month
  • Fed's Powell again stresses patience as U.S. economy's 'narrative' unfolds
  • Fed wouldn't wait too long responding to overseas slowdown -Clarida
  • Trump threatens to use emergency power to build wall, end shutdown
  • Japan likely to revise proposed budget due to wage-data errors
  • Japan Nov All Household Spending YY, -0.6%, -0.1% f'cast, -0.3% prev
  • Japan Nov Current Account NSA JPY, 757.2 bln, 567.6 bln f'cast, 1,309.9 bln prev
  • Australia Nov Retail Sales MM, 0.4%, 0.3% f'cast, 0.3% prev
  • U.S.-based stock funds draw $8.74 bln in latest week - Lipper
  • U.S. muni bond funds post $1.6 bln in inflows-Lipper
  • Foreign CB US debt holdings +$6.663 bln to $3.396 tln Jan 9 week
  • Treasuries +$6.549 bln to $3.022 tln, agencies +$25 mln to $307.151 bln

Economic Data Ahead

  • (0430 ET/0930 GMT) Great Britain Nov GDP Estimate YY, 1.3% f'cast, 1.5% prev
  • (0430 ET/0930 GMT) Great Britain Nov Industrial Output MM, 0.2% f'cast, -0.6% prev
  • (0430 ET/0930 GMT) Great Britain Nov Industrial Output YY, -0.7% f'cast, -0.8% prev
  • (0430 ET/0930 GMT) Great Britain Nov Manufacturing Output MM, 0.3% f'cast, -0.9% prev
  • (0430 ET/0930 GMT) Great Britain Nov Manufacturing Output YY, -0.7% f'cast, -1.0% prev

Key Events Ahead

  • (0320 ET/0820 GMT) ECB's Yves Mersch speaks at the international conference organized by National Bank of Slovakia in Bratislava.

FX Beat

DXY: The dollar index declined as Fed Chairman Jerome Powell and Vice Chair Richard Clarida struck a dovish tone, highlighting the central bank's willingness to remain patient on the issue of raising rates. The greenback against a basket of currencies trades 0.2 percent down at 95.38, having touched a low of 95.03 the day before, its lowest since Oct. 16. FxWirePro's Hourly Dollar Strength Index stood at -121.55 (Highly Bullish) by 0500 GMT.

EUR/USD: The euro gained, reversing some of its previous session losses, as the greenback eased after Fed Chairman Jerome Powell reiterated the U.S. central bank has the ability to be patient on monetary policy; given that inflation remains stable. The European currency traded 0.3 percent up at 1.1529, having touched a high of 1.1569 on Thursday, its highest since Oct. 17. FxWirePro's Hourly Euro Strength Index stood at 44.68 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. consumer price index and monthly budget statement. Immediate resistance is located at 1.1599 (October 11 High), a break above targets 1.1621 (October 16 High). On the downside, support is seen at 1.1463 (October 4 Low), a break below could drag it till 1.1411 (Jan. 8 Low).

USD/JPY: The dollar eased as investors grew increasingly confident that the U.S. Federal Reserve may pause on monetary tightening this year. The major was trading 0.1 percent down at 108.28, having hit a low of 107.77 on Thursday, its lowest since Jan 4. FxWirePro's Hourly Yen Strength Index stood at -59.37 (Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index and monthly budget statement. Immediate resistance is located at 109.08 (January 8 High), a break above targets 109.46 (April 26 High). On the downside, support is seen at 107.65 (April 23 Low), a break below could take it lower 107.35 (April 20 Low).

GBP/USD: Sterling steadied after British lawmakers demanded that the government come up with a plan B within days if PM May loses a Jan. 15 parliament vote on her Brexit deal. The major traded 0.1 percent up at 1.2761, having hit a high of 1.2803 on Wednesday; it’s highest since December 31. FxWirePro's Hourly Sterling Strength Index stood at -13.62 (Neutral) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal and series of data from the UK docket, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2815 (December 31 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2706 (January 8 Low), a break below targets 1.2680 (December 31 Low). Against the euro, the pound was trading 0.1 percent down at 90.31 pence, having hit a low of 90.59 on Thursday, it’s lowest since January 3.

AUD/USD: The Australian dollar rallied to a near 1-month peak after domestic data showed retail sales edged higher 0.4 percent in November, suggesting consumer spending picked up after a very soft third quarter. The Aussie trades 0.4 percent up at 0.7213, having hit a high of 0.7219 earlier; it’s highest since December 14. FxWirePro's Hourly Aussie Strength Index stood at 137.67 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7116 (January 8 Low), a break below targets 0.7085 (December 20 Low). On the upside, resistance is located at 0.7246 (December 13 High), a break above could take it near 0.7273 (December 6 High).

NZD/USD: The New Zealand dollar advanced to an over 3-week peak, as the greenback eased after Fed Chairman Jerome Powell emphasized the central bank would be patient and careful on further rate increases. The Kiwi trades 0.6 percent up at 0.6822, having touched a high of 0.6826 earlier, its highest level December 19. FxWirePro's Hourly Kiwi Strength Index was at 154.43 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6853 (Nov. 21 High), a break above could take it near 0.6880 (Dec. 18 High). On the downside, support is seen at 0.6726 (Jan. 7 Low), a break below could drag it below 0.6691 (Dec. 31 Low).

Equities Recap

Asian shares surged to a 5-week peak after Chairman Jerome Powell reiterated the Fed will be patient about raising interest rates and on news of extended trade talks between Washington and Beijing.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

Tokyo's Nikkei rallied 0.9 percent to 20,359.70 points, Australia's S&P/ASX 200 index fell 0.4 percent to 5,774.60 points and South Korea's KOSPI gained 0.6 percent to 2,075.05 points.

Shanghai composite index surged 0.7 percent to 2,553.63 points, while CSI300 index traded 0.8 percent up at 3,095.75 points.

Hong Kong’s Hang Seng traded 0.4 percent higher at 26,637.33 points. Taiwan shares added 0.4 percent to 9,759.40 points.

Commodities Recap

Crude oil prices steadied, supported by output cuts agreed by major exporters, however, concerns over the outlook for the global economy undermined crude prices. International benchmark Brent crude was trading 0.5 percent up at $61.50 per barrel by 0508 GMT, having hit a high of $61.88 on Thursday, its highest since December 13. U.S. West Texas Intermediate was trading 0.4 percent higher at $52.47 a barrel, after rising as high as $52.75 on Thursday, its highest since the December 14.

Gold prices surged, reversing some of its previous session losses, as the dollar eased on expectations the U.S. central bank may pause interest rates hikes if the U.S. economy slows this year. Spot gold rose 0.5 percent to $1,292.53 per ounce at 0514 GMT, having touched a high of $1,298.42 on Friday, its highest level since June 15. U.S. gold futures were up 0.3 percent at $1,290.8 per ounce.

Treasuries Recap

The Australian government bonds traded flat during Asian session as investors remain sidelined in quiet trading session despite better-than-expected November retail sales data. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, traded flat at 2.315 percent, the yield on the long-term 30-year bond remained steady at 2.843 percent and the yield on short-term 2-year stood at 1.899 percent.

The Canadian government bond prices gave back most of their earlier gains in sympathy with U.S. Treasuries. The 10-year rose 2 Canadian cents to yield 1.975 percent. On Wednesday, the 10-year yield touched its highest intraday since Dec. 27 at 2.000 percent.

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