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Asia Roundup: Aussie rebounds as trade surplus widens, dollar eases against yen amid U.S.-North Korea tension, investors eye ECB policy decision - Thursday, March 7th, 2019

Market Roundup

  • Movement at North Korea ICBM plant viewed as missile-related - South Korea
     
  • Huawei sues US government saying ban on its equipment is unconstitutional
     
  • Trump says China trade talks going well, predicts 'good deal' or no deal
     
  • China says to collect more profits from state-owned financial institutions amid tax cuts
     
  • China says proactive fiscal policy does not mean opening floodgate of stimulus
     
  • China securities regulator gives IMF access to China's capital markets
     
  • UK to set up Brexit advisory groups to find alternative arrangements for Irish border
     
  • Ex-aide to Canada PM denies wrongdoing over SNC-Lavalin; Trudeau to address crisis
     
  • Australia Jan Retail Sales MM, 0.1%, 0.3% f’cast, -0.4% prev
     
  • Australia Jan Trade Balance G&S (A$), 4,549 mln, 3,000 mln f’cast, 3,681 mln prev, 3,769 mln rvsd
     

Economic Data Ahead

  • (0330 ET/0830 GMT) Great Britain Feb Halifax House Prices MM, 0.1% f’cast, -2.9% prev
     
  • (0330 ET/0830 GMT) Great Britain Feb HalifaxHousePrice 3M/YY, 1.0% f’cast, 0.8% prev
     
  • (0500 ET/1000 GMT) EZ Q4 GDP Revised QQ, 0.2% f’cast, 0.2% prev
     
  • (0500 ET/1000 GMT) EZ Q4 GDP Revised YY, 1.2% f’cast, 1.2% prev
     
  • (0500 ET/1000 GMT) EZ Q4 Employment Final YY, 1.2% f’cast, 1.2% prev
     
  • (0500 ET/1000 GMT) EZ Q4 Employment Final QQ, 0.3% f’cast, 0.3% prev
     
  • (0745 ET/1245 GMT) EZ Mar ECB Refinancing Rate, 0.00% f’cast, 0.00% prev
     
  • (0745 ET/1245 GMT) EZ Mar ECB Deposit Rate, -0.40% f’cast, -0.40% prev
     

Key Events Ahead

  • N/A Governing Council of the ECB holds monetary policy meeting in Frankfurt
     
  • (0320 ET/0820 GMT) ECB's top banking supervisor, Andrea Enria, speaks at an event in Frankfurt
     
  • (0430 ET/0930 GMT) Silvana Tenreyro, member of the monetary policy committee, speaks in Glasgow
     
  • (0830 ET/1330 GMT) ECB President Mario Draghi holds a press conference, after the interest rate meeting in Frankfurt
     
  • (0900 ET/1400 GMT) German Finance Minister Olaf Scholz talks about preparations for Brexit at a DHL hub in Leipzig
     
  • (1215 ET/1715 GMT) Federal Reserve Governor Lael Brainard participates in a lecture series in Princeton
     
  • (1230 ET/1730 GMT) ECB executive board member Peter Praet participates in a conference in Paris
     
  • (1245 ET/1745 GMT) Bank of Canada's deputy governor Lynn Patterson speaks at an event in Hamilton
     

FX Beat

DXY: The dollar index held gains after ADP National Employment Report showed U.S. private payrolls increased by 183,000 in February after surging 300,000 in January, indicating the pace of job gains remains more than enough to drive the unemployment rate down. The greenback against a basket of currencies traded flat at 96.88, having touched a high of 97.01 on Tuesday, its highest since February 19. FxWirePro's Hourly Dollar Strength Index stood at 60.93 (Bullish) by 0500 GMT.

EUR/USD: The euro consolidated near a 2-week low hit in the previous session as investors remained cautious ahead of the European Central Bank's policy meeting due later in the day. The ECB is likely to cut growth forecasts and is expected to take tentative steps to combat an economic slowdown. The European currency traded 0.05 percent down at 1.1304, having touched a low of 1.1285 the day before, its lowest since Feb. 19. FxWirePro's Hourly Euro Strength Index stood at -43.43 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone gross domestic product, employment change, and ECB interest rate decision, ahead of the U.S. unemployment benefit claims, consumer claims and Fed Brainard's speech. Immediate resistance is located at 1.1341 (Feb. 13 High), a break above targets 1.1371 (Feb. 20 High). On the downside, support is seen at 1.1275 (Feb. 19 Low), a break below could drag it till 1.1234 (Feb. 15 Low).

USD/JPY: The dollar declined, extending previous session losses, as signs of tension between the United States and North Korea, and renewed fears of a slowdown in global growth sent investors seeking safety in the safe-haven assets. The major was trading 0.1 percent down at 111.67, having hit a high of 112.13 on Tuesday, its highest since December 20.  FxWirePro's Hourly Yen Strength Index stood at 147.06 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. unemployment benefit claims, consumer claims and Fed Brainard's speech. Immediate resistance is located at 112.20, a break above targets 112.60 (Dec. 20 High). On the downside, support is seen at 111.32 (Mar. 1 Low), a break below could take it lower at 110.66 (Feb.28 Low).

GBP/USD: Sterling steadied near a 1-week low as a deadlock over Brexit stoked concern that a vote on Prime Minister Theresa May's proposed deal for Britain's departure from European Union could be delayed. The major traded 0.1 percent up at 1.3178, having hit a low of 1.3097 on Tuesday; it’s lowest since Feb.26. FxWirePro's Hourly Sterling Strength Index stood at -3.89 (Neutral) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3254 (March 4 High), a break above could take it near 1.3288 (Feb.26 High). On the downside, support is seen at 1.3093 (Feb. 26 Low), a break below targets 1.3011 (Feb. 20 Low). Against the euro, the pound was trading 0.1 percent down at 85.77 pence, having hit a low of 86.45 on Tuesday, it’s lowest since Feb 26.

AUD/USD: The Australian dollar rebounded from a fresh 2-month low after data showed Australia posted its second biggest trade surplus on record in January at A$4.5 billion, surpassing forecasts of A$3.0 billion. However, soft retail sales figures limited the upside. The Aussie trades 0.2 percent up at 0.7045, having hit a low of 0.7020 earlier; it’s lowest since Jan. 4. FxWirePro's Hourly Aussie Strength Index stood at -16.66 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6993 (Jan.4 Low), a break below targets 0.6965. On the upside, resistance is located at 0.7150 (Feb. 22 High), a break above could take it near 0.7206 (Feb. 21 High).

NZD/USD: The New Zealand dollar retreated from a 3-week low as investors narrowed the odds on rate cuts. The Kiwi trades 0.2 percent up at 0.6784, having touched a low of 0.6752 the day before, its lowest level Feb. 13. FxWirePro's Hourly Kiwi Strength Index was at 52.84 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6853 (Feb. 22 High), a break above could take it near 0.6941 (Feb. 1 High). On the downside, support is seen at 0.6719 (Feb. 12 Low), a break below could drag it below 0.6706 (Feb. 22 Low).

Equities Recap

Asian shares slumped, amid persisting concerns in the market as investors awaited some kind of resolution to U.S.-China trade negotiations.

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

Tokyo's Nikkei declined 0.8 percent to 21,428.93 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,263.90 points and South Korea's KOSPI eased 0.8 percent to 2,157.87 points.

Shanghai composite index fell 0.1 percent to 3,099.56 points, while CSI300 index traded 1.2 percent down at 3,802.11 points.

Hong Kong’s Hang Seng traded 0.8 percent lower at 28,805.73 points. Taiwan shares shed 0.5 percent to 10,311.68 points.

Commodities Recap

Crude oil prices surged amid ongoing OPEC-led supply cuts and U.S. sanctions against exporters Venezuela and Iran, although record U.S. crude output and rising commercial fuel inventories limited upside. International benchmark Brent crude was trading 0.6 percent up at $66.25 per barrel by 0410 GMT, having hit a high of $67.11 on Friday, its highest since February 25. U.S. West Texas Intermediate was trading 0.4 percent higher at $56.37 a barrel, after rising as high as $57.85 on Friday, its highest since the November 16.

Gold prices consolidated near a 1-1/2 month low touched earlier in the week, amid concerns over global growth and tepid equity markets. Spot gold trades flat at $1,286.19 per ounce by 0422 GMT, having touched a low of $1,281.08 on Tuesday, its lowest since January 25. U.S. gold futures were flat at $1,288.10 an ounce.

Treasuries Recap

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.077 percent, the yield on the long-term 30-year bond also fell nearly 2 basis points to trade at 2.643 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at 1.677 percent by 04:00GMT.

The New Zealand government bonds gained, sending yields 4.5 basis points lower at the long end of the curve.

The Canadian government bond prices were higher across the yield curve, with the 10-year rising 50.4 Canadian cents to yield 1.820 percent. The 10-year yield touched its lowest intraday since June 2017 at 1.790 percent.

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April 23 14:00 UTC Released

USNew Home Sales Chg MM

Actual

4.5 %

Forecast

-2.5 %

Previous

4.9 %

April 23 14:00 UTC Released

USUnits

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0.692 %

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0.65 %

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0.667 %

January 31 00:00 UTC 645167645167m

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January 22 19:00 UTC 656987656987m

ARTrade Balance

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-1541 %

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2016 bln ARS

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January 22 19:00 UTC 656987656987m

ARTrade Balance

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-1541 %

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2016 bln ARS

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