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Asia Roundup: Aussie rebounds on upbeat wage data, euro slumps on weak economic outlook, greenback near 4-1/2 month peak as investors eye FMOC minutes - Wednesday, February 19th, 2020

Market Roundup

  • Gold holds above $1,600
  • Weak German data dents euro
     
  • Oil gains capped by fears over the economic impact of the virus

Economic Data Ahead

  • (0400 ET/0900 GMT) EZ Current Account n.s.a (Dec)        
  • (0400 ET/0900 GMT) EZ Current Account s.a (Dec)            
  • (0430 ET/0930 GMT) UK Consumer Price Index (MoM) (Jan)   
        
  • (0430 ET/0930 GMT) UK Retail Price Index (YoY) (Jan)   
      
  • (0430 ET/0930 GMT) UK PPI Core Output (YoY) n.s.a (Jan)            
  • (0430 ET/0930 GMT) UK Consumer Price Index (YoY) (Jan)   
            
  • (0430 ET/0930 GMT) UK Core Consumer Price Index (YoY) (Jan)   
                 
  • (0430 ET/0930 GMT) UK Producer Price Index - Input (MoM) n.s.a (Jan)   
                 
  • (0430 ET/0930 GMT) UK Producer Price Index - Input (YoY) n.s.a (Jan)    
     
  • (0430 ET/0930 GMT) UK Retail Price Index (MoM) (Jan)
     
  • (0430 ET/0930 GMT) UK Producer Price Index - Output (MoM) n.s.a (Jan)
               
  • (0430 ET/0930 GMT) UK DCLG House Price Index (YoY) (Dec)      
     
  • (0430 ET/0930 GMT) UK Producer Price Index - Output (YoY) n.s.a (Jan)     
               
  • (0430 ET/0930 GMT) UK PPI Core Output (MoM) n.s.a (Jan)
     
  • (0500 ET/1000 GMT) EZ Construction Output w.d.a (YoY) (Dec)  
     
  • (0500 ET/1000 GMT) EZ Construction Output s.a (MoM) (Dec)

Key Events Ahead

  • (0300 ET/0800 GMT) Non-Monetary Policy ECB Meeting

FX Beat

DXY: The dollar index advanced to a 4-1/2 month peak as investors await the minutes from the Federal Reserve’s January meeting, due to be released at 1900 GMT, for insights on the U.S. monetary policy outlook. The greenback against a basket of currencies traded flat at 99.45, having touched a high of 99.48 earlier, its highest since Oct. 1.

EUR/USD: The euro eased, hovering towards a near 3-year low hit below the 1.0800 handle, weighed down by a survey showing German investor confidence slumped as its economy stagnates. On Tuesday, Germany's ZEW research institute said in its monthly survey that investors' sentiment deteriorated far more than expected in February, on worries the coronavirus would dampen world trade. The European currency traded down at 1.0795, having touched a low of 1.0785 earlier, its lowest since May 2017. Investors’ attention will remain on ECB non-monetary policy meeting, current account and construction output, ahead of the U.S. producer price index, building permits, housing permits and FOMC minutes. Immediate resistance is located at 1.0833 (5-DMA), a break above targets 1.0892. On the downside, support is seen at 1.0767, a break below could drag it below 1.0743.

USD/JPY: The dollar rallied to a 1-week peak as a drop in new virus cases eased fears about the economic fallout of the epidemic. The increase in the number of new virus cases slowed in China’s Hubei province even as the death toll rose by 132 as of Tuesday. The major was trading 0.1 percent up at 110.02, having hit a high of 110.11 earlier, its highest since Feb. 12. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index, building permits, housing permits and FOMC minutes. Immediate resistance is located at 110.17, a break above targets 110.29. On the downside, support is seen at 109.72, a break below could take it near at 109.50 (21-DMA).

GBP/USD: Sterling slumped, extending losses for the third straight session on conflicting views put forth by Britain and the European Union about their trade negotiations. The major traded down at 1.2991, having hit a high of 1.3069 on Thursday, it’s highest since Feb. 3. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3024 (21-DMA), a break above could take it near 1.3063. On the downside, support is seen at 1.2971 (10-DMA), a break below targets 1.2956. Against the euro, the pound was trading 0.1 percent down at 83.08 pence, having hit a high of 82.81 on Tuesday, it’s highest since Dec.13.

AUD/USD: The Australian dollar rebounded from a 1-week low hit in the previous session after data showed domestic annual wage price index rose a tepid 2.2 percent in the final quarter of last year with pay rewards in the public sector slowing to the weakest pace on record. On Tuesday, the major slumped to its lowest since Feb 10 on minutes from the Reserve Bank of Australia's first meeting of the year that showed policymakers discussed easing policy. The Aussie trades 0.1 percent up at 0.6692, having hit a low of 0.6673 the day before, it’s lowest since Feb. 10.  Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6670, a break below targets 0.6652. On the upside, resistance is located at 0.6729, a break above could take it near 0.6750.

NZD/USD: The New Zealand dollar consolidated near a 1-week trough as risk appetite weakened over fears about the hit to world economies from the coronavirus outbreak. The Kiwi trades 0.1 percent up at 0.6390, having touched a low of 0.6381 on Tuesday earlier, its lowest level since Feb. 11. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6449, a break above could take it near 0.6484. On the downside, support is seen at 0.6381, a break below could drag it below 0.6358.

Equities Recap

Asian shares nudged up as investors tried to shake off worries about the coronavirus epidemic following a slight decline in the number of new cases.

MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.7 percent.

Tokyo's Nikkei surged 0.9 percent to 23,400.70 points, Australia's S&P/ASX 200 index rose 0.4 percent to 7,144.60 points and South Korea's KOSPI declined 0.05 percent to 2,207.74 points.

Shanghai composite index fell 0.2 percent to 2,980.59 points, while CSI 300 index traded 0.1 percent up at 4,058.01 points.

Hong Kong’s Hang Seng traded 0.4 percent higher at 27,631.21 points. Taiwan shares added 0.9 percent to 11,758.84 points

Commodities Recap

Crude oil prices rallied to a near 3-week peak amid expectations the Organization of the Petroleum Exporting Countries (OPEC) and its allies will deepen supply cuts. International benchmark Brent crude was trading 1.1 percent higher at $58.24 per barrel by 0526 GMT, having hit a high of $58.40 earlier, its highest since Jan. 31. U.S. West Texas Intermediate was trading 0.8 percent up at $52.50 a barrel, after rising as high as $52.64 earlier, its highest since Jan 31.

Gold prices held steady near the key $1,600 mark as an uptick in equities due to a drop in new virus cases was kept in check by fears about the economic fallout of the epidemic. Spot gold was trading 0.1 percent up at $1,602.81 per ounce by 0535 GMT, having touched a high of $1605.13 on Tuesday, its highest since Jan. 8. U.S. gold futures were up 0.1 percent to $1,604.80.

Treasuries Recap

The Japanese government bond prices ticked lower amid a recovery in domestic equities. The benchmark 10-year JGB futures fell 0.09 point to 152.69, retreating from 1-week high of 152.83 hit on Tuesday. The 10-year JGB yield rose 0.5 basis point to minus 0.050 percent, compared with a 2-week low of minus 0.055 percent hit in the previous session. The 20-year JGB yield rose 1.5 basis points to 0.240 percent. The 30-year JGB yield rose 1.5 basis points to 0.365 percent. The two-year JGB yield fell 0.5 basis point to minus 0.160percent, while the five-year yield was flat at minus 0.150 percent.

The Australian bonds remained flat during morning trading hours ahead of the country’s labour market report for the month of January, due to be released on February 20 by 00:30GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.044 percent, the yield on the long-term 30-year bond slipped 1 basis point to 1.638 percent and the yield on short-term 2-year too steadied at 0.749 percent.

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