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Asia Roundup: Kiwi off 1-week low on upbeat manufacturing PMI, greenback steadies on strong U.S. housing and employment-related data, investors eye EZ consumer price index - Friday, May 17th, 2019 

Market Roundup

  • U.S. 'not sincere' about wanting more trade talks with China - media
     
  • Huawei ban clouds U.S.-China trade talks, tech sector   
     
  • U.S. terminates Turkey's preferential trade agreement, reduces tariffs on steel
     
  • Pompeo meets with Hong Kong pro-democracy leader
     
  • Trump tells aides he does not want U.S. war with Iran
     
  • With inflation elusive, two Fed policymakers lay out a welcome mat
     
  • Britain's May to agree departure after latest Brexit deal bid
     
  • Australian politicians scramble to win over undecided voters, honour former PM
     
  • NZ Apr Manufacturing PMI, 53.0, 51.9 prev
     
  • U.S. muni bond funds post $1.3 bln in inflows-Lipper
     
  • Foreign CB US debt holdings +$7,843 bln to $3.469 tln May 15 week
     
  • Treasuries +$6,161 bln to $3.062 tln, agencies +$676 mln to $332.818 bln
     

Economic Data Ahead

  • (0500 ET/0900 GMT) EU Apr HICP Final YY, 1.7% f'cast, 1.7% prev
     
  • (0500 ET/0900 GMT) EU Apr HICP Final MM, 0.7% f'cast, 1.0% prev
     

Key Events Ahead

  • N/A European Union finance ministers meet in Brussels
     
  • N/A ECB Vice President Luis de Guindos participates in ECOFIN meeting in Brussels
     
  • (0700 ET/1100 GMT) Riksbank's board meeting in Stockholm
     
  • (0800 ET/1200 GMT) BoE's Executive Director, Financial Stability Strategy and Risk, Alex Brazier, speaks at Allen & Overy in London
     
  • (1000 ET/1400 GMT) Fed's Clarida meets with LEAP Academy students and tours campus in Camden, New Jersey
     
  • (1115 ET/1515 GMT) New York Fed President John Williams participates in meeting with members of the Community League of the Heights (CLOTH) in New York
     
  • (1330 ET/1730 GMT) Philadelphia Fed President Patrick Harker speaks before the "Fed Listens: Education, Employment, and Monetary Policy in the Third District" in Philadelphia
     
  • (1340 ET/1740 GMT) Fed's Clarida speaks at "Fed Listens: Education, Employment and Monetary Policy in the Third District" in Philadelphia
     

FX Beat

DXY: The dollar index consolidated near a 2-week peak, supported by strong U.S. economic data and a bounce in Treasury yields. The greenback against a basket of currencies traded flat at 97.79, having touched a high of 97.88 earlier, its highest since May 3. FxWirePro's Hourly Dollar Strength Index stood at 74.49 (Bullish) by 0600 GMT.

EUR/USD: The euro steadied after plunging to a near 2-week low in the previous session on weak economic fundamentals and Italian political concerns. On Thursday, Italian Deputy Prime Minister Matteo Salvini stated that Italy's right-wing League party will break European Union rules which are strangling the country if it scores well in a European parliamentary election later this month. The European currency traded 0.05 percent up at 1.1179, having touched a high of 1.1263 on Monday, its highest since May 1. FxWirePro's Hourly Euro Strength Index stood at -59.31 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on the Eurozone consumer price index and construction output, ahead of the preliminary Michigan consumer sentiment index, and speeches by Fed's Clarida and Williams. Immediate resistance is located at 1.1218 (May 7 High), a break above targets 1.1262 (April 22 High). On the downside, support is seen at 1.1140 (April 24 Low), a break below could drag it till 1.1100.

USD/JPY: The dollar declined as U.S.-China trade concerns continued to dent investor sentiment. Earlier in the day, the pair rose to a 1-week peak on robust U.S. housing data and weekly jobless claims report that indicated sustained labour market strength in the economy. The major was trading 0.2 percent down at 109.58, having hit a low of 109.01 on Monday, its lowest since Feb. 1. FxWirePro's Hourly Yen Strength Index stood at -35.67 (Neutral) by 0600 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the preliminary Michigan consumer sentiment index, and speeches by Fed's Clarida and Williams. Immediate resistance is located at 110.36 (50.0% retracement of 111.68 and 109.01), a break above targets 110.67 (61.8% retracement). On the downside, support is seen at 109.01 (May 14 Low), a break below could take it lower at 108.49 (Jan. 31 Low).

GBP/USD: Sterling plunged to a 3-month low as Britain faces a potentially disorderly exit from the European Union, with Prime Minister Theresa May struggling to keep her Brexit deal and her premiership. The major traded 0.1 percent down at 1.2787, having hit a low of 1.2782 earlier; it’s lowest since Feb. 14. FxWirePro's Hourly Sterling Strength Index stood at -112.15 (Highly Bearish) 0600 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.2878 (Feb. 14 High), a break above could take it near 1.2939 (Feb. 11 High). On the downside, support is seen at 1.2772 (Feb. 14 Low), a break below targets 1.2709 (Jan. 11 Low). Against the euro, the pound was trading 0.1 percent down at 87.41 pence, having hit a low of 87.47 on Thursday, it’s lowest since Feb. 19.

AUD/USD: The Australian dollar slumped to a 4-1/2 month low as soft domestic employment data heightened expectations for an interest rate cut by the Reserve Bank of Australia. The Aussie trades 0.2 percent down at 0.6886, having hit a low of 0.6879, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at -58.15 (Bearish) by 0600 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6863, a break below targets 0.6835. On the upside, resistance is located at 0.6961 (Apr. 30 High), a break above could take it near 0.7002 (May 6 High).

NZD/USD: The New Zealand dollar slightly edged higher from a 1-week low hit earlier in the day, after data showed domestic April manufacturing PMI rose to 53.0 from a previous reading of 51.9. The Kiwi trades 0.1 percent up at 0.6542, having touched a low of 0.6527, its lowest level May 8. FxWirePro's Hourly Kiwi Strength Index was at 15.82 (Bearish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6591 (May 14 High), a break above could take it near 0.6653 (May 3 High). On the downside, support is seen at 0.6514 (Nov. 1 Low), a break below could drag it below 0.6474 (Oct. 4 Low).

Equities Recap

Asian shares declined as U.S.-China trade tensions showed no signs of easing, hitting risk sentiment across-the-board.

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

Tokyo's Nikkei rose 0.9 percent to 21,250.09 points, Australia's S&P/ASX 200 index gained 0.6 percent to 6,365.30 points and South Korea's KOSPI tumbled 0.6 percent to 2,055.80 points.

Shanghai composite index fell 2.6 percent to 2,880.29 points, while CSI 300 index traded 2.6 percent down at 3,646.81 points.

Hong Kong’s Hang Seng traded 1.1 percent lower at 27,966.10 points. Taiwan shares shed 0.9 percent to 10,384.11 points

Commodities Recap

Crude oil prices rose and were on track for the first weekly gains this month, as rising tensions in the Middle East stoked fears of supply disruptions. International benchmark Brent crude was trading 0.1 percent higher at $72.82 per barrel by 0435 GMT, having hit a high of $73.33 on Thursday, its highest since Apr, 26. U.S. West Texas Intermediate was trading 0.05 percent up at $63.12 a barrel, after rising as high as $63.46 on Thursday, its highest since the May 2.

Gold prices steadied, after recording its biggest one-day percentage loss in a month in the previous session on a firmer dollar due to strong U.S. data. Spot gold traded flat at $1,286.51 per ounce by 0445 GMT, having touched a high of $1,303.21 on Tuesday, its highest since Apr. 11. U.S. gold futures were 0.1 percent lower at $1,285.20 an ounce.

Treasuries Reap

The 10-year U.S. Treasury note yielded 2.387 percent, having pulled back from a near two-month low of 2.354 percent recorded the previous day.

The Japanese government bond prices fell, with the five-year and 10-year JGB yields rising half a basis point each to minus 0.170 percent and minus 0.060 percent , respectively. The 30-year yield climbed 1 basis point to 0.520 percent.

The Canadian government bond prices were lower across the yield curve, with the two-year declining 1 Canadian cent to yield 1.587 percent and the 10-year down 12 Canadian cents to yield 1.680 percent.

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