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Asia Roundup: Dollar rallies as U.S. Treasury yields surge, sterling consolidates on mixed growth figures, Asian shares plunge - Wednesday, August 12th, 2020

Market Roundup

  • Oil rallies on bigger-than-expected drop in U.S. crude stocks
     
  • Gold falls below $1,900 level as U.S. dollar, yields rise
     

Economic Data Ahead

  • (0500 ET/0900 GMT) Italy Consumer Price Index (YoY)(Jul)           
     
  • (0500 ET/0900 GMT) Italy Consumer Price Index (EU Norm) (MoM)(Jul)     
               
  • (0500 ET/0900 GMT) Italy Consumer Price Index (MoM)(Jul)       
     
  • (0500 ET/0900 GMT) Italy Consumer Price Index (EU Norm) (YoY)(Jul)
       
  • (0500 ET/0900 GMT) EZ Industrial Production w.d.a. (YoY)(Jun)  
     
  • (0500 ET/0900 GMT) EZ Industrial Production s.a. (MoM)(Jun)
     

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index advanced to an over 1-week peak as investors were looking for signs that the political impasse in Washington over the next stimulus programme can be overcome. The greenback against a basket of currencies traded 0.2 percent up at 93.78, having touched a high of 93.91 earlier, its highest since August 4.

EUR/USD: The euro declined to a near 2-week low as the greenback rallied following a rise in the in U.S. Treasury yields. The European currency traded 0.1 percent lower at 1.1732, having touched a low of 1.1711 earlier, its lowest since August 3. Investors’ attention will remain on a series of data from Eurozone economies and EZ industrial production, ahead of the U.S. consumer price index. Immediate resistance is located at 1.1800 (5-DMA), a break above targets 1.1848. On the downside, support is seen at 1.1675, a break below could drag it below 1.1642.

USD/JPY: The dollar rallied to a near 3-week peak following a surge in the yield on 10-year U.S. debt and hopes of vaccine development. President Vladimir Putin said that Russia had grant regulatory approval to a COVID-19 vaccine after less than two months of human testing. The major was trading 0.2 percent up at 106.71, having hit a high of 106.79 earlier, its highest since August 24. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index. Immediate resistance is located at 106.90 a break above targets 107.22. On the downside, support is seen at 106.22, a break below could take it near at 105.89 (5-DMA).

GBP/USD: Sterling consolidated within narrow ranges on mixed UK economic growth figures. Data released earlier showed the U.K. economy contracted by 20.4 percent in the second quarter of 2020, compared to the previous three months, as coronavirus-induced lockdowns hammered activity. Meanwhile, GDP expanded by 8.7 percent in June as government lockdown measures eased, having shown a meek 1.8 percent recovery in May. The major traded flat at 1.3046, having hit a high of 1.3185 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 1.3110, a break above could take it near 1.3147. On the downside, support is seen at 1.3004, a break below targets 1.2977. Against the euro, the pound was trading flat at 89.93 pence, having hit a high of 89.69 on Tuesday, it’s highest since July 13.

AUD/USD: The Australian dollar slumped to a 1-week low, after data showed the country's wages grew at their slowest pace on record in the second quarter, underscoring the damage the coronavirus has done to household spending. Both annual and quarterly wage growth were at the weakest level since records began in September 1997. The Aussie trades 0.2 percent lower at 0.7126, having hit a low of 0.7109 earlier, it’s lowest since August 4. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7174 (5-DMA), a break above could take it near 0.7197. On the downside, support is seen at 0.7090, a break below targets 0.7063.

Equities Recap

Asian shares plunged on growing uncertainty over whether the U.S. lawmakers would agree on an additional round of big fiscal stimulus to support the economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 0.8 percent.

Tokyo's Nikkei rose 0.4 percent to 22,833.75 points, Australia's S&P/ASX 200 index declined 0.3 percent to 6,122.70 points. South Korea's KOSPI fell 0.05 percent to 2,417.24 points.

Shanghai composite index eased 1.6 percent to 3,285.60 points, while CSI 300 index traded 1.8 percent down at 4,599.72 points.

Hong Kong’s Hang Seng traded 0.1 percent lower at 24,872.28 points. Taiwan shares shed 0.9 percent to 12,670.35 points.

Commodities Recap

Crude oil prices surged, reversing some of its previous session losses after an industry report showed that U.S. inventories of crude fell more than expected. International benchmark Brent crude was trading 0.3 percent up at $44.71 per barrel by 0551 GMT, having hit a high of $45.76 on Tuesday, its highest since August 5. U.S. West Texas Intermediate was trading 0.3 percent higher at $41.75 a barrel, after rising as high as $42.92 on Tuesday, its highest since August 5.

Gold prices declined below the $1,900 per ounce level as a resurgent dollar prompted investors to reassess their positions. Spot gold slumped 1.6 percent to $1,881.33 per ounce by 0557 GMT, having lost as much as 2 percent to hit a low of $1862.89, its lowest since July 22. U.S. gold futures slid 2.4 percent to $1,900.

Treasuries Recap

The U.S. Treasury yields surge, with the benchmark 10-year note yield trading at 0.673 percent.

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