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Asia Roundup: Aussie steadies after RBA minutes, dollar hits 8-week high against yen as investors await Fed meeting for rate clues, Asian shares decline - Tuesday, September 19th, 2017

Market Roundup

  • Australia jobs pick-up to continue, but leave wages behind – RBA
     
  • Australia Q2 House Prices Index 1.9% vs forecast 1.1%, last 2.2%
     
  • Japan must keep fiscal discipline if sales tax revenue used for other purposes-Aso
     
  • Japan's Abe to pledge something for all generations in snap election-source
     
  • Firm economic growth to ease French budget balancing act - ministers
     
  • In first speech at U.N., Trump to single out North Korea, Iran
     
  • Japan firms see U.S., China economies expanding at a healthy clip
     
  • New Zealand consumer confidence dips in 3rd qtr -Westpac survey

Economic Data Ahead

  • (0500 ET/0900 GMT) Germany Sep ZEW Economic Sentiment, 12.5 eyed, last 10.0
     
  • (0500 ET/0900 GMT) Germany Sep ZEW Current Conditions, 86.6 eyed, last 86.7

Key Events Ahead

  • (0535 ET/0935 GMT) UK Stg2.5bln for 20 year auction
     
  • (0630 ET/1030 GMT) ESM E1.5bln for 6-month auction
     
  • (0745 ET/1145 GMT) BoE's Donald Kohn speaks in Basel, Switzerland

FX Beat

DXY: The dollar eased versus most of its major peers, as a fall in the U.S. Treasury yields weighed heavily on the U.S. dollar bull's sentiments. The greenback against a basket of currencies traded 0.2 percent down at 91.84, having touched a high of 92.66 last week, its highest since Sept. 5. FxWirePro's Hourly Dollar Strength Index stood at -45.54 (Neutral) by 0500 GMT.

EUR/USD: The euro advanced, extending gains for the fourth straight session, as the greenback weakened, in response to tumbling U.S. Treasury yields. Investors now await the German ZEW surveys, with the German ZEW economic sentiment expected to improve after four consecutive months of declines. The European currency traded 0.2 percent up at 1.1977, having touched a low of 1.1838 on Thursday, its lowest since Aug. 31. FxWirePro's Hourly Euro Strength Index stood at 82.78 (Slightly Bullish) by 0500 GMT. Investors’ attention will remain on German ZEW surveys and Eurozone current account figures, ahead of U.S. building permits, housing starts, import and export price index. Immediate resistance is located at 1.2000, a break above targets 1.12030. On the downside, support is seen at 1.1909 (21-DMA), a break below could drag it near 1.1873 (Sept. 13 Low).

USD/JPY: The dollar rallied to a fresh 8-week high against the Japanese yen as investors awaited the Federal Reserve's policy statement later in the week for fresh hints on the possible pace and timing of further U.S. monetary tightening. The Fed at the end of its two-day policy meeting is widely expected to sound more hawkish and to announce that it will start paring its balance sheet, with the reductions seen likely to commence this year. The major was trading 0.2 percent up at 111.79, having hit a high of 111.86 earlier in the session, its highest since Jul. 26. FxWirePro's Hourly Yen Strength Index stood at -149.60 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. building permits, housing starts, import and export price index for further momentum. Immediate resistance is located at 112.00, a break above targets 112.41. On the downside, support is seen at 110.65 (5- DMA), a break below could take it near 110.12 (61.8% retracement of 107.31 and 111.86).

GBP/USD: Sterling gained, reversing most of its previous session losses on speculation that the Bank of England would raise interest rates soon for the first time in nearly a decade. On Monday, the major eased from a 15-month peak after BoE Governor Mark Carney said any coming interest rate rises would be limited and gradual. Sterling traded up at 1.3551, having hit a high of 1.3618 in the prior session, its highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 156.66 (Highly Bullish) by 0500 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3600, a break above could take it near 1.3650. On the downside, support is seen at 1.3453 (78.6% retracement of 1.2852 and 1.3618), a break below targets 1.3325 (61.8% retracement). Against the euro, the pound was trading 0.1 percent up at 88.48 pence, having hit a high of 87.74 pence last week, its highest since Jul. 17.

AUD/USD: The Australian dollar rose, rebounding from a 2-week low after the Reserve Bank of Australia's latest policy meeting minutes stressed the need to balance the risk of high household debt and low CPI. The minutes also showed that policy makers reiterated the disinflationary impact of the strong Aussie dollar. The Aussie trades 0.2 percent up 0.7976, having hit a low of 0.7940 on Monday, it’s lowest since Sept. 5. FxWirePro's Hourly Aussie Strength Index stood at -3.30 (Neutral) by 0500 GMT.  Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7940 (Previous Session Low), a break below targets 0.7920. On the upside, resistance is located at 0.8000, a break above could take it near 0.8080.

NZD/USD: The New Zealand dollar gained after retreating from a 6-week high hit in the previous session as investors awaited the country’s second-quarter gross domestic product (GDP) reading and the general election due later in the week. The Kiwi trades 0.3 percent up at 0.7284, having touched a high of 0.7343 on Monday, its highest level since Aug. 10. FxWirePro's Hourly Kiwi Strength Index was at 99.11 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7300, a break above could take it near 0.7343 (Previous Session High). On the downside, support is seen at 0.7248 (10-DMA), a break below could drag it till 0.7211.

Equities Recap

Asian shares tumbled as investors’ remained uncertain ahead of a Federal Reserve meeting that could provide further clues on U.S. monetary policy.

MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.1 percent

Tokyo's Nikkei rose 2.05 percent to 20,317.45 points, Australia's S&P/ASX 200 index fell 0.1 percent to 5,713.60 points and South Korea's KOSPI declined 0.1 percent to 2,415.38 points.

Shanghai composite index eased 0.1 percent to 3,360.30 points, while CSI300 index was trading 0.1 percent down at 3,838.25 points.

Hong Kong’s Hang Seng was trading 0.06 percent lower at 28,143.52 points. Taiwan shares shed 0.5 percent to 10,576.14 points.

Commodities Recap

Crude oil prices eased after reports showed an expected rise in U.S. shale output, however a fall in Saudi Arabian crude exports provided some support. International benchmark Brent crude was trading 0.1 percent down at $55.35 per barrel by 0505 GMT, having hit a high of $55.96 on Thursday, its strongest since Apr. 13. U.S. West Texas Intermediate was trading 0.3 percent up at $49.87 a barrel, after rising as high as $50.47 last week, its highest since May. 25.

Gold prices steadied after falling to its lowest in over two weeks on Monday as the dollar shed some gains, while the market's focus shifted on a two-day Federal Reserve meeting that commences later in the day. Spot gold was up 0.1 percent at $1,307.61 an ounce by 0509 GMT, after falling to a low of $1,304.55 in the previous session, its lowest level since Aug 31. U.S. gold futures for December delivery edged up 0.1 percent to $1,312.20 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.223 percent lower by 0.007 bps, while 5-year yield was 0.007 bps down at 1.819 percent.

The Japanese government bonds traded tad higher as investors wait to watch the Bank of Japan’s monetary policy decision for the month of September, scheduled to be unveiled on September 21. The yield on the benchmark 10-year Treasury note slipped 1 basis point to 0.03 percent, the yield on long-term 30-year also fell nearly 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.14 percent.

The Australian bonds eased losses after the Reserve Bank of Australia (RBA) maintained a balanced view of the economy in the September monetary policy meeting minutes, released early today. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.82 percent, the yield on the 15-year note climbed nearly 1 basis point to 3.11 percent and the yield on short-term 2-year also traded 1 basis point higher at 2.00 percent.

The New Zealand bonds ended Tuesday session on a weaker note as investors wait to watch the country’s second-quarter gross domestic product (GDP), scheduled to be released on September 20 by 22:45GMT, besides, the GlobalDairyTrade price auction, due on September 19 for further direction in the bond market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 3.01 percent, the yield on 7-year note also fell 1 basis point to 2.86 percent while the yield on short-term 2-year ended 1/2 basis point higher at 2.12 percent.

The Canadian government bond prices were higher across the yield curve, with the two-year up 6 Canadian cents to yield 1.567 percent and the 10-year up 8 Canadian cents to yield 2.081 percent. Earlier in the session, the 10-year yield touched its highest since October 2014 at 2.119 percent.

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