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Asia Roundup: Aussie slumps on rate cut expectations, greenback off 2-week low after release of Fed minutes, Asian shares rally - Thursday, February 21st, 2019

Market Roundup

  • U.S., China sketch outlines of deal to end trade war -sources
     
  • Fed flags end to balance sheet runoff, patience on rates
     
  • Fed wants balance sheet to align with rate policy -Daly
     
  • U.S. House Democrats move to block Trump's emergency declaration on border
     
  • China's desire for close Iran ties unchanged, Xi says ahead of Saudi prince's visit
     
  • "Time of the essence," says May on latest Brussels shuttle
     
  • Risk of no-deal Brexit has risen - UK Home Secretary Sajid Javid
     
  • Brazil president seeks $270 billion pension savings; Congress has doubts
     
  • Japan manufacturing shrinks for first time since 2016 amid trade war - PMI
     
  • Australia Jan Employment, 39.1k, 15.0k f’cast, 21.6k prev
     
  • Australia Jan Unemployment Rate, 5.0%, 5.0% f’cast, 5.0% prev
     

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Jan CPI Final YY, 1.4% f’cast, 1.4% prev
     
  • (0200 ET/0700 GMT) Germany Jan HICP Final YY, 1.7% f’cast, 1.7% prev
     
  • (0245 ET/0745 GMT) France Feb Business Climate Mfg, 102 f’cast, 103 prev
     
  • (0245 ET/0745 GMT) France Jan CPI (EU Norm) Final YY, 1.4% f’cast, 1.4% prev
     
  • (0315 ET/0815 GMT) France Feb Markit Mfg Flash PMI, 51.0 f’cast, 51.2 prev
     
  • (0330 ET/0830 GMT) Germany Feb Markit Mfg Flash PMI, 49.7 f’cast, 49.7 prev
     
  • (0330 ET/0830 GMT) Germany Feb Markit Service Flash PMI, 52.9 f’cast, 53.0 prev
     
  • (0330 ET/0830 GMT) Germany Feb Markit Comp Flash PMI, 52.0 f’cast, 52.1 prev
     
  • (0400 ET/0900 GMT) EZ Feb Markit Mfg Flash PMI, 50.3 f’cast, 50.5 prev
     
  • (0400 ET/0900 GMT) EZ Feb Markit Serv Flash PMI, 51.4 f’cast, 51.2 prev
     
  • (0400 ET/0900 GMT) EZ Feb Markit Comp Flash PMI, 51.1 f’cast, 51.0 prev
     

Key Events Ahead

  • (0300 ET/0800 GMT) ECB chief economist Peter Praet speaks at a conference in Luxembourg
     
  • (0400 ET/0900 GMT) President of the European Commission Jean-Claude Juncker speaks in Brussels
     
  • (0830 ET/1330 GMT) ECB chief economist Peter Praet participates in a panel discussion in Brussels
     
  • (0850 ET/1350 GMT) Atlanta Fed President Raphael Bostic to speak on the economic outlook and monetary policy in Atlanta
     
  • (1250 ET/1750 GMT) Bank of Canada Governor Stephen Poloz speaks in Montreal
     

FX Beat

DXY: The dollar index rebounded from a 2-week low after the Fed, in the minutes of its latest meeting in January, stated that the U.S. economy and its labour market remained robust, prompting expectations of at least one more interest rate hike this year. The greenback against a basket of currencies trades 0.05 percent up at 96.56, having touched a low of 96.29 on Wednesday, its lowest since February 6. FxWirePro's Hourly Dollar Strength Index stood at -101.47 (Highly Bearish) by 0400 GMT.

EUR/USD: The euro steadied, after easing from a 2-week peak in the previous session, following German Finance Minister Olaf Scholz's comments, citing that Germany and France broadly agreed a detailed proposal for a new eurozone budget and will present their final joint position in the coming days. The European currency traded 0.1 percent up at 1.1348, having touched a high of 1.1371 on Wednesday, its highest since Feb. 6. FxWirePro's Hourly Euro Strength Index stood at 48.60 (Neutral) by 0400 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, and EZ Markit prelim PMI's ahead of the U.S. unemployment benefit claims, durable goods, and Markit flash PMI's. Immediate resistance is located at 1.1368 (Feb.7 High), a break above targets 1.1394 (Jan. 23 High). On the downside, support is seen at 1.1314 (5-DMA), a break below could drag it till 1.1289 (Feb. 18 Low).

USD/JPY: The dollar eased, halting a 3-day rallying, as investors turned cautious after U.S. President Donald Trump stated that the United States would impose tariffs on European car imports if it cannot reach a trade deal with the European Union. The major was trading 0.05 percent down at 110.78, having hit a high of 110.95 on Wednesday, its highest since February 14.  FxWirePro's Hourly Yen Strength Index stood at -121.83 (Highly Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, durable goods, and Markit flash PMI's. Immediate resistance is located at 111.05 (Feb. 13 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 110.25 (Feb.15 Low), a break below could take it lower at 109.60 (Feb. 7 Low).

GBP/USD: Sterling declined, extending previous session losses, following the decision of three lawmakers to quit the Conservative Party over British Prime Minister Theresa May's Brexit policy. The major traded 0.05 percent down at 1.3045, having hit a high of 1.3109 on Wednesday; it’s highest since February 1.  FxWirePro's Hourly Sterling Strength Index stood at 159.61 (Highly Bullish) 0400 GMT. Investors’ attention will remain on BoE Haldane's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3103 (Feb. 4 High), a break above could take it near 1.3160 (January 31 High). On the downside, support is seen at 1.2998 (21-DMA), a break below targets 1.2943 (5-DMA). Against the euro, the pound was trading 0.2 percent down at 86.99 pence, having hit a high of 86.72 on Tuesday, it’s highest since Jan. 29.

AUD/USD: The Australian dollar rose to a 2-week peak after data showed domestic jobs growth surpassed all expectations in January as firms took on more full-time staff while the jobless rate stayed at its lowest in seven years. However, the major turned lower after Westpac Banking Corp projected cuts in the official cash rate later this year, citing slowing economic growth and lukewarm inflation. The Aussie trades 0.9 percent down at 0.7095, having hit a high of 0.7206 earlier; it’s highest since February 6. FxWirePro's Hourly Aussie Strength Index stood at 28.80 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7124 (Feb.18 Low), a break below targets 0.7089 (Feb. 7 Low). On the upside, resistance is located at 0.7235 (January 11 High), a break above could take it near 0.7264 (Feb. 5 High).

NZD/USD: The New Zealand dollar plunged, extending losses from the prior session, as the greenback gained after minutes from the Federal Reserve's last meeting revived expectations for a possible U.S. rate hike this year. The Kiwi trades 0.5 percent down at 0.6826, having touched a high of 0.6893 on Monday, its highest level Feb. 6. FxWirePro's Hourly Kiwi Strength Index was at -100.37 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data.  Immediate resistance is located at 0.6911 (Dec. 11 High), a break above could take it near 0.6941 (Feb. 1 High). On the downside, support is seen at 0.6804 (10-DMA), a break below could drag it below 0.6766 (Feb. 6 Low).

Equities Recap

Asian shares surged to fresh 4-1/2-month highs as U.S.-China trade talks hinted of progress towards a deal in their tariff war.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.

Tokyo's Nikkei gained 0.4 percent to 21,507.34 points, Australia's S&P/ASX 200 index surged 0.7 percent to 6,139.20 points and South Korea's KOSPI rallied 0.1 percent to 2,232.38 points.

Shanghai composite index rose 0.4 percent to 2,770.99 points, while CSI300 index traded 0.5 percent up at 3,469.28 points.

Hong Kong’s Hang Seng traded 0.3 percent higher at 28,587.58 points. Taiwan shares added 0.5 percent to 10,319.53 points.

Commodities Recap

Crude oil prices surged, hovering near to its 2019 highs, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran, although slowing growth in the global economy limited the upside. International benchmark Brent crude was trading 0.2 percent up at $67.21 per barrel by 0420 GMT, having hit a high of $67.36 on Wednesday, its highest since November 19. U.S. West Texas Intermediate was trading 0.3 percent higher at $57.39 a barrel, after rising as high as $57.57 on Wednesday, its highest since the November 16.

Gold prices steadied near a 10-month peak, as the dollar held firm in the wake of minutes from the latest U.S. Federal Reserve meeting that stoked expectations of a possible rate hike later in the year. Spot gold gained 0.2 percent to $1,340.10 per ounce by 0424 GMT, having touched a high of $1,346.61 per ounce on Wednesday, its highest level since April 20. U.S. gold futures were down 0.4 percent at $1,342.5 per ounce.

Treasuries Recap

The Longer-dated Japanese government bond prices rose, with the 30-year JGB yield down 1 basis point at 0.570 percent, its lowest since December 2016.  The 20-year yield slipped half a basis point to 0.400 percent after touching 0.395 percent, a low not seen since November 2016. The benchmark 10-year yield stood flat at minus 0.040 percent.

The Australian government bond futures seesawed, with the three-year bond contract adding 3 ticks to 98.385, while the 10-year contract rose 4 ticks to 97.9350.

The New Zealand government bonds were well bid, with yields down as much as 4 basis points.

The Canadian government bond prices were mixed across a steeper yield curve. The two-year was flat to yield 1.774 percent and the 10-year declined 4 Canadian cents to yield 1.895 percent.

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March 22 14:00 UTC Released

MXMth Infl MM

Actual

0.26 %

Forecast

0.27 %

Previous

-0.1 %

March 22 14:00 UTC Released

MXMth Infl YY

Actual

3.95 %

Forecast

3.96 %

Previous

3.89 %

January 31 00:00 UTC 598503598503m

ARAnnual Primary Balance*

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2016 bln ARS

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January 31 00:00 UTC 598503598503m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 610323610323m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 598503598503m

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 610323610323m

ARTrade Balance

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Forecast

Previous

-1541 %

January 31 00:00 UTC 598503598503m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 598503598503m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 598503598503m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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Bln AR bln ARS

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