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Asia Roundup: Aussie steadies as RBA keeps policy steady, dollar gains against yen as investors await U.S. stimulus deal, Asian shares surge - Tuesday, August 4th, 2020

Market Roundup

  • Oil prices fall amid fuel demand concerns
  • Gold steadies near record high as virus fears persist
  • RBA holds cash rate at 0.25 percent

Economic Data Ahead

  • (0500 ET/0900 GMT) EZ Producer Price Index (YoY)(Jun)               
  • (0500 ET/0900 GMT) EZ Producer Price Index (MoM)(Jun)

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar consolidated within narrow ranges after a Reuters analysis found the United States had a second straight week of slowing infections, but a fourth week in a row of rising deaths. Additionally, Chicago Fed President Charles Evans reiterated overnight that the next help for the virus-battered U.S. economy must come from fiscal policy, shifting investors focus on signs of progress in Washington.

EUR/USD: The euro steadied after tumbling to a 1-week low in the prior session, after data showed factory activity across the euro zone expanded, reflecting an improvement globally as China, Britain and the United States reported upbeat numbers. The European currency traded 0.1 percent higher at 1.1768, having touched a high of 1.1909 on Monday, its highest since May 2018. Investors’ attention will remain on a series of data from Eurozone economies, and EZ producer price index, ahead of the U.S. factory orders. Immediate resistance is located at 1.1848, a break above targets 1.1910. On the downside, support is seen at 1.1698 (10-DMA), a break below could drag it below 1.1641.

USD/JPY: The dollar surged, hovering towards an over 1-week peak hit in the previous session, after top Democrats in Congress and White House negotiators said they had made headway in talks on the latest coronavirus relief bill. Moreover, a better-than-expected expansion in the Institute for Supply Management’s U.S. manufacturing index further supported the bid tone around the dollar. The major was trading 0.1 percent up at 106.09, having hit a high of 106.47 in the prior session, its highest since July 24. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. factory orders. Immediate resistance is located at 106.56 (21-DMA), a break above targets 106.90. On the downside, support is seen at 105.68, a break below could take it near at 105.30 (5-DMA).

GBP/USD: Sterling declined, extending losses for the third straight session, weighed down by Brexit, the UK’s high COVID-19 death toll, and the risk of negative interest rates. According to a Reuters tally of official statements, Britain has the fourth-highest coronavirus death toll in the world. The major traded 0.1 percent down at 1.3061, having hit a high of 1.3170 on Thursday, it’s highest since March 9. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3128, a break above could take it near 1.3170. On the downside, support is seen at 1.3000, a break below targets 1.2944. Against the euro, the pound was trading 0.2 percent down at 90.81 pence, having hit a high of 89.80 on Friday, it’s highest since July 13.

AUD/USD: The Australian dollar steadied after slumping to an over 1-week low in the prior session, as the country's central bank left its cash rate at a record low of 0.25 percent, a widely expected decision,  ruling out further easing for the moment amid much economic uncertainty. However, the RBA painted a gloomy picture for the coming months, predicting the jobless rate would rise to 10 percent later this year. The Aussie trades flat at 0.7125, having hit a low of 0.7076 on Monday, it’s lowest since July 24. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7164, a break above could take it near 0.7197. On the downside, support is seen at 0.7082, a break below targets 0.7053 (21-DMA).

Equities Recap

Asian shares rose after strong U.S. manufacturing data and gains in tech stocks offset worries about the coronavirus and global economy.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.1 percent.

Tokyo's Nikkei surged 1.8 percent to 22,592.07 points, Australia's S&P/ASX 200 index rallied 1.9 percent to 6,037.60 points. South Korea's KOSPI nudged higher 1.1 percent to 2,275.97 points.

Shanghai composite index rose 0.4 percent to 3,380.99 points, while CSI 300 index traded 0.2 percent up at 4,779.91 points.

Hong Kong’s Hang Seng traded 1.7 percent higher at 24,876.96 points. Taiwan shares added 1.6 percent to 12,709.92 points.

Commodities Recap

Crude oil prices declined amid concerns that a nascent recovery in fuel demand could stall as a fresh wave of COVID-19 infections around the world stoked tighter lockdowns. International benchmark Brent crude was trading 0.1 percent down at $43.84 per barrel by 0459 GMT, having hit a high of $44.43 on Monday, its highest since July 23. U.S. West Texas Intermediate was trading 0.1 percent lower at $40.74 a barrel, after falling as low as $38.74 on Thursday, its lowest since July 10.

Gold prices eased after rising to near record highs in the previous session on worries over the global economic fallout from mounting COVID-19 cases. Spot gold was trading 0.1 percent down at $1,975.07 per ounce by 0507 GMT, having hit an all time high of $1,986.76 on Monday. U.S. gold futures rose 0.3 percent to $1,993.

Treasuries Recap

The U.S. Treasury yields edged higher, with the benchmark 10-year note yield trading at 0.555 percent.

  • Market Data

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