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Asia Roundup: Kiwi at 3-week low as RBNZ meeting looms, dollar rallies against yen amid no U.S. government shutdown hopes, Asian shares surge - Tuesday, February 12th, 2019

Market Roundup

  • U.S. lawmakers reach tentative deal to avoid government shutdown
     
  • British cabinet ministers believe PM May preparing to resign - The Sun
     
  • 'Something has to give,' EU's Barnier tells Brexit Britain
     
  • UK budget surplus goal no longer credible – lawmakers
     
  • China's consumption growth likely to slow further in 2019 - commerce ministry
     
  • JGB yields pull back from 2-year lows as BOJ trims debt purchase amount
     
  • Australia Dec Housing Finance, -6.1%, -2.8% f'cast, -0.9% prev
     
  • Australia Jan NAB Business Conditions, 7, 2 prev
     
  • Australia Jan NAB Business Confidence, 4, 3 prev
     
  • New Zealand Q1 Inflation Forecast 2 yrs, 2.02%, 2.03% prev

Economic Data Ahead

  • No major economic data releases
     

Key Events Ahead

  • N/A ECB's Luis de Guindos participates in ECOFIN meeting - Brussels
     
  • N/A EU Economic and Financial Affairs Council meeting - Brussels
     
  • (0300 ET/0800 GMT) Riksbank holds monetary policy meeting – Stockholm
     
  • (0400 ET/0900 GMT) Germany economy minister Peter Altmaier holds US-German LNG conference – Berlin
     
  • (0400 ET/0900 GMT) ECB's Ewald Nowotny participates in panel discussion on "The European Fund for Strategic Investments and its potential for Austria" - Vienna
     
  • (0715 ET/1215 GMT) BoE's Mark Carney speaks at an FT event - London
     
  • (1245 ET/1745 GMT) Fed's Jerome Powell speaks on "Economic Development in High Poverty Rural Communities" - Itta Bena, Mississippi
     
  • (1830 ET/2330 GMT) FRB Cleveland's Loretta Mester speaks on economic outlook and monetary policy at Xavier University and Financial Executives International - Cincinnati, Ohio
     

FX Beat

DXY: The dollar index slightly eased after rising to a 1-1/2 month peak in the prior session on hopes that a new round of U.S.-China trade talks would help to resolve a dispute that dented global growth. The greenback against a basket of currencies trades 0.05 percent down at 97.04, having touched a high of 97.12 the day before, its highest since December 26. FxWirePro's Hourly Dollar Strength Index stood at 139.70 (Highly Bullish) by 0500 GMT.

EUR/USD: The euro steadied after falling to a 2-1/2 month low in the previous session on expectations the European Central Bank will maintain a highly accommodative monetary policy this year as growth slowed in the eurozone and inflation stayed low. The European currency traded 0.05 percent up at 1.1279, having touched a low of 1.1267 earlier, its lowest since Nov. 28. FxWirePro's Hourly Euro Strength Index stood at -66.50 (Bearish) by 0500 GMT. Immediate resistance is located at 1.1341 (5-DMA), a break above targets 1.1368 (Feb.7 High). On the downside, support is seen at 1.1263 (Nov. 14 Low), a break below could drag it till 1.1216 (Nov. 13 Low).

USD/JPY: The dollar rallied to a 6-1/2 week peak as U.S. congressional negotiators reached a tentative deal on Monday to try to avert another partial government shutdown on Saturday. The major was trading 0.2 percent up at 110.58, having hit a high of 110.65 earlier, its highest since December 28. FxWirePro's Hourly Yen Strength Index stood at -15.55 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of Fed officials' speeches. Immediate resistance is located at 110.94 (Aug. 13 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 109.96 (5-DMA), a break below could take it lower at 109.16 (Jan. 28 Low).

GBP/USD: Sterling steadied after plunging to a 3-week low in the prior session on data that showed Britain's economy last year grew at its slowest since 2012, as Brexit uncertainty hit investment and the slowdown pick up the pace at the end of 2018. The major traded 0.1 percent up at 1.2867, having hit a low of 1.2845 on Monday; it’s lowest since January 21. FxWirePro's Hourly Sterling Strength Index stood at -11.28 (Neutral) 0500 GMT. Immediate resistance is located at 1.2939 (5-DMA), a break above could take it near 1.3001 (January 17 High). On the downside, support is seen at 1.2827 (November 12 Low), a break below targets 1.2800. Against the euro, the pound was trading flat at 87.68 pence, having hit a low of 88.21 last week, it’s lowest since Jan. 22.

AUD/USD: The Australian dollar rebounded after falling to a 1-1/2 month low as risk sentiment improved on expectations that U.S. lawmakers had reached a tentative deal on border security funding that would avoid another partial government shutdown due to commence on Saturday. The Aussie trades 0.3 percent up at 0.7079, having hit a low of 0.7054 earlier; it’s lowest since January 4. FxWirePro's Hourly Aussie Strength Index stood at -68.49 (Highly Bearish) by 0500 GMT. Immediate support is seen at 0.7044 (Dec. 26 Low), a break below targets 0.7016 (Dec. 27 Low). On the upside, resistance is located at 0.7117 (Feb. 7 High), a break above could take it near 0.7166 (January 24 High).

NZD/USD: The New Zealand dollar plunged to a fresh 3-week low as the Reserve Bank of New Zealand is expected to leave interest rates unchanged at its policy meeting on Wednesday but may adopt a more dovish tone and cut forecasts, amid rising global economic risks. The Kiwi trades 0.05 percent down at 0.6729, having touched a low of 0.6719, its lowest level Jan. 22. FxWirePro's Hourly Kiwi Strength Index was at -143.06 (Highly Bearish) by 0500 GMT. Immediate resistance is located at 0.6798 (Jan. 23 High), a break above could take it near 0.6832 (Jan. 14 High). On the downside, support is seen at 0.6706 (Jan. 22 Low), a break below could drag it below 0.6671 (Jan. 4 Low).

Equities Recap

Asian shares rallied as market sentiment improved on news that U.S. lawmakers reached a tentative deal on border security funding and hope that a new round of U.S.-China trade talks would help to resolve a dispute.

MSCI's broadest index of Asia-Pacific shares outside Japan extended advanced 0.3 percent.

Tokyo's Nikkei gained 2.6 percent to 20,864.21 points, Australia's S&P/ASX 200 index rallied 0.3 percent to 6,079.10 points and South Korea's KOSPI surged 0.5 percent to 2,192.18 points.

Shanghai composite index rose 0.5 percent to 2,667.63 points, while CSI300 index traded 0.6 percent up at 3,325.71 points.

Hong Kong’s Hang Seng traded 0.1 percent higher at 28,175.64 points. Taiwan shares added 0.9 percent to 10,097.74 points.

Commodities Recap

Crude oil prices surged amid OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela, however, concerns over economic growth limited gains. International benchmark Brent crude was trading 0.5 percent up at $61.85 per barrel by 0549 GMT, having hit a low of $60.58 on Thursday, its lowest since February 1. U.S. West Texas Intermediate was trading 0.4 percent higher at $52.65 a barrel, after falling as low as $51.22 on Monday, its lowest since the January 17.

Gold prices steadied as investors kept a cautious stance ahead of a fresh round of U.S –China trade talks. Spot gold was trading flat at $1,308.67 per ounce by 0551 GMT, having touched a low of $1,302.71 on Thursday, its lowest level since Jan. 29. U.S. gold futures were also mostly unchanged at $1,312.20 per ounce.

Treasuries Recap

The Japanese government bonds remained mixed towards the end of the Asian session, despite a surge in global risk sentiments after a fresh round of trade talks started between the United States and China, thus pushing global stock prices higher. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1-1/2 basis points to -0.013 percent, the yield on the long-term 30-year jumped nearly 2-1/2 basis points to 0.602 percent and the yield on short-term 2-year plunged 16 basis points to -0.160 percent.

The Australian government bonds slumped across the curve during the Asian trading session on hopes of possible trade agreement. Still, low investor risk appetite due to fear of another U.S. government shutdown, limited the growth in bond yields.The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose  about 2 basis points to 2.112 percent, the yield on the long-term 30-year bond also climbed 2 basis points to 2.66 percent and the yield on short-term 2-year jumped over 1 basis points to 1.75 percent.

The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 4 Canadian cents to yield 1.792 percent and the 10-year declined 25 Canadian cents to yield 1.910 percent.

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106.9 %

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