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Asia Roundup: Kiwi gains on upbeat Q2 CPI, dollar steadies against yen ahead of  Fed Chair Powell's testimony, Asian shares trade in red - Tuesday, July 17th, 2018 

Market Roundup

  • Britain's May wins parliament vote after bowing to Brexit pressure
     
  • Trump backs Putin on election meddling at summit, stirs fierce criticism
     
  • Australia's central bank stresses need for steady policy given household debt risk
     
  • Fed's Kashkari, citing yield curve, wants rate hike pause
     
  • China state planner approves $39 bln in fixed-asset investment projects in H1
     
  • China Jun House Prices, 5%, 4.7% last
     
  • New Zealand Q2 CPI YY, 1.5%, 1.6% f'cast, 1.1% last

Economic Data Ahead

  • (0430 ET/0830 GMT) Great Britain Jun Claimant Count Unem Chng,-2.1l f'cast, -7.7k last
     
  • (0430 ET/0830 GMT) Great Britain May ILO Unemployment Change, 4.2% f'cast, 4.2% last
     
  • (0500 ET/0900 GMT) Italy Jun Consumer Prices Final YY, 1.4% f'cast, 1.4% last
     
  • (0500 ET/0900 GMT) Italy Jun CPI (EU Norm) Final YY, 1.5% f'cast, 1.5% last
     

Key Events Ahead

  • N/A Bank of England Governor Mark Carney speaks and FCA Andrew Bailey speaks in Farnborough, England
     
  • (1000 ET/1400 GMT) Fed's Powell speaks gives semi-annual testimony in Washington D.C.

FX Beat

DXY: The dollar index slumped to a 6-day low as investors awaited Federal Reserve Chairman Jerome Powell's first congressional testimony for any clues on the pace of U.S. interest rate rises.  The greenback against a basket of currencies trades 0.1 percent down at 94.39, having touched a high of 95.24 on Friday, its highest since June 29. FxWirePro's Hourly Dollar Strength Index stood at -63.28 (Bearish) by 0500 GMT.

EUR/USD: The euro steadied above the 1.1700 handle as the greenback tumbled ahead of United States Federal Reserve Powell testimony before the Senate Banking Committee. The European currency traded 0.05 percent up at 1.1715, having touched a high of 1.1790 last week, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 68.94 (Bearish) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of U.S. industrial production, capacity utilization figures and Fed Powell testimony. Immediate resistance is located at 1.1744 (June 4 High), a break above targets 1.1801 (June 13 High). On the downside, support is seen at 1.1657 (21-DMA), a break below could drag it till 1.1630 (July 4 Low).

USD/JPY: The dollar rose, extending previous session gains, as investors expect Federal Reserve Powell to reaffirm the Fed's gradual monetary tightening policy in his testimony before the U.S. Senate Banking Committee. The major was trading 0.1 percent up at 112.41, having hit a high of 112.80 on Friday, its highest since Jan 9. FxWirePro's Hourly Yen Strength Index stood at -123.99 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. industrial production, capacity utilization figures and Fed Powell testimony. Immediate resistance is located at 113.07 (Dec 19 High), a break above targets 113.38 (Dec 8 High). On the downside, support is seen at 111.91 (July 12 Low), a break below could take it lower 111.30 (10-DMA).

GBP/USD: Sterling held firm after trimmed gains in the previous session on news that a debate in Britain's parliament exposed the level of dissatisfaction within British Prime Minister Theresa May's governing Conservative Party over her plans for Brexit. The major traded 0.1 percent up at 1.3243, having hit a low of 1.3102 on Friday; it’s highest since July  2. FxWirePro's Hourly Sterling Strength Index stood at -35.05 (Neutral) 0500 GMT. Investors’ attention will remain on the UK Average Earnings including bonuses and without bonuses, unemployment readings and a speech from the Bank of England's Governor Mark Carney, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3274 (July 5 High), a break above could take it near 1.3362 (July 9 High). On the downside, support is seen at 1.3180 (July 12 Low), a break below targets 1.3114 (July 3). Against the euro, the pound was trading 0.05 percent up at 88.45 pence, having hit a low of 89.00 pence last week, it’s lowest since March 9.

AUD/USD: The Australian dollar consolidated within narrow ranges as the country's central bank expressed concern about the impact of high household debt on the economy. The Aussie trades 0.2 percent up at 0.7430, having hit a high of 0.7483 last week; it’s highest since June 14. FxWirePro's Hourly Aussie Strength Index stood at 85.68 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7345, a break below targets 0.7300. On the upside, resistance is located at 0.7444 (July 6 High), a break above could take it near 0.7490.

NZD/USD: The New Zealand dollar rallied to a 1-week peak, after the economy's consumer price index rose by an annual 1.5 percent in the second quarter from a previous reading of1.1 percent, indicating that inflation was on track to meet the Reserve Bank of New Zealand's target midpoint of 2 percent. The Kiwi trades 0.8 percent up at 0.6828, having touched a high of 0.6840 earlier, its highest level since July 10. FxWirePro's Hourly Kiwi Strength Index was at 81.21 (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 0.660, a break above could take it near 0.6900. On the downside, support is seen at 0.6736 (June 29 Low), a break below could drag it below 0.6700.

Equities Recap

Asian shares declined, weighed by a sharp fall in crude oil prices as Libyan ports reopened, while the dollar held gains against the yen ahead of Federal Reserve Chairman Jerome Powell's first congressional testimony.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.5 percent.

Tokyo's Nikkei rallied 0.4 percent to 22,697.36 points, Australia's S&P/ASX 200 index declined 0.6 percent to 6,203.60 points, and South Korea's KOSPI slumped 0.2 percent to 2,298.55 points.

Shanghai composite index fell 0.8 percent to 2,791.22 points, while CSI300 index was trading 0.8 percent up at 3,441.73 points.

Hong Kong’s Hang Seng was trading 1.2 percent lower at 28,204.89 points. Taiwan shares shed 0.4 percent to 10,778.99 points.

Commodities Recap

Crude Brent crude prices rebounded from a 3-month low after more oil workers went on strike in Norway. International benchmark Brent crude was trading 0.3 percent up at $72.11 per barrel by 0511 GMT, having hit a low of $71.56 on Monday, its lowest since April 17. U.S. West Texas Intermediate was trading 0.1 percent higher at $68.06 a barrel, after falling as low as $67.61 on Monday, its lowest since June 22.

Gold prices consolidated within narrow ranges as the U.S. dollar remained largely unchanged ahead of the U.S. Federal Reserve Chairman Jerome Powell's first congressional testimony. Spot gold was steady at $1,241.14 an ounce at 0517 GMT,  after marking the lowest since Dec. 12 at $1,236.46 on Friday. U.S. gold futures for August delivery were unchanged at $1,239.70 an ounce.

Treasuries Recap

The Japanese government bonds remained flat during Asian session Tuesday after returning from a long weekend as investors wait to watch the country’s trade balance data for the month of June and national consumer price inflation data for the same period, scheduled to be released on July 18 and 19 by 23:50GMT and 23:30GMT respectively. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, remained flat at 0.04 percent, the yield on the long-term 30-year hovered around 0.68 percent and the yield on short-term 2-year too traded steady at -0.12 percent.

The Australian government bonds slumped on Tuesday after the Reserve Bank of Australia (RBA) July meeting minutes reiterated next move to be interest rate hike not cut, pushing the yield on the 10-year bond yield to nearly 1-month high. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2 basis points to 2.661 percent, the yield on the long-term 30-year Note jumped 2-1/2 basis points to 3.142 percent and the yield on short-term 2-year up 1-1/2 basis points to 2.032 percent.

The New Zealand bonds slumped at close as investors have largely shrugged-off the disappointment from the country’s consumer price inflation (CPI) for the second quarter of this year. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 4-1/2 basis points to 2.90 percent, the yield on the long-term 20-year note also surged 4-1/2 basis points to 3.22 percent and the yield on short-term 2-year closed 4 basis points higher at 1.87 percent.

The Canadian government bond prices were lower across much of the yield curve in sympathy with U.S. Treasuries. The two-year yield was up at 1.932 percent, while the 10-year rose to 2.141 percent from 2.133 percent late on Friday.

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