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Asia Roundup: Kiwi rebounds despite bigger-than-expected trade deficit, yen gains as Trump's comments on China trigger risk aversion, Asian shares volatile - Tuesday, November 27th, 2018

Market Roundup

  • Trump says he expects to raise China tariffs -Wall Street Journal
     
  • Trump says Brexit agreement may hamper U.S.-British trade; UK differs
     
  • GM to slash jobs and production, drawing Trump's ire
     
  • May begins tour of Britain to sell Brexit deal benefits
     
  • Tory MPs to back May's deal if she gives timetable for departure -Times
     
  • Italy sticks to 2019 budget goals, for now, ahead of cost review
     
  • Fractured Australian government sets stage for May election with early budget
     
  • Euro zone slowdown not enough for ECB to change course: Draghi
     
  • Bitcoin sinks as cryptocurrency sell-off gathers pace
     
  • Ukraine introduces martial law citing threat of Russian invasion
     
  • Manafort accused of lying to Mueller probe, blowing up plea deal
     
  • New Zealand Oct Trade Balance, -1295 mln, -1560 mln prev, 1596 mln r'vsd
     
  • New Zealand Oct Imports, 6.15 bln, 5.89 bln prev, 5.84 bln r'vsd
     
  • New Zealand Oct Exports, -5.79 bln, -5.19 bln prev, -5.33 bln r'vsd
     

Economic Data Ahead

  • (0245 ET/0745 GMT) France Nov Consumer Confidence, 94 f'cast, 95 prev
     
  • (0600 ET/1100 GMT) Great Britain Nov CBI Distributive Trades, 10 f’cast, 5 prev
     

Key Events Ahead

  • (0430 ET/0930 GMT) BoE Executive Director for International Banks Supervision, Sarah Breeden participates in Climate Finance Day in Paris
     
  • (0830 ET/1330 GMT) Fed's Vice Chairman Richard Clarida speaks on "Data Dependence and U.S. Monetary Policy" before the Clearing House 2018 Annual Conference in New York
     
  • (1100 ET/1600 GMT) Keynote speech by ECB board member Yves Mersch at Werkstattgesprache "Nachhaltigkeit wird Mainstream" in Frankfurt, Germany
     
  • (1430ET/1930 GMT) Chicago Fed President Charles Evans, Atlanta Fed President Raphael Bostic and Kansas Fed City President Esther George participate in a panel before the Clearing House 2018 Annual Conference in New York
     
  • (1500 ET/2000 GMT) Reserve Bank of New Zealand releases half-yearly financial stability report in Wellington
     

FX Beat

DXY: The dollar index steadied after rising to a near 2-week peak in the previous session, as investors await possible cues from the Federal Reserve about policy direction. The greenback against a basket of currencies trades 0.05 percent up at 97.05, having touched a high of 97.10 on Monday, its highest since Nov 15. FxWirePro's Hourly Dollar Strength Index stood at 68.15 (Bullish) by 0500 GMT.

EUR/USD: The euro surged on signs that Italy may cut its budget deficit target to satisfy the European Union. On Monday, the Italian government stated that it was sticking to its main 2019 budget goals for now as it awaits a cost analysis of its main spending measures, but were open the possibility of cutting its deficit target. The European currency traded 0.1 percent up at 1.1341, having touched a low of 1.1325 on Monday, its lowest since Nov. 16. FxWirePro's Hourly Euro Strength Index stood at -31.51 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. Housing Price Index and speeches from Fed officials. Immediate resistance is located at 1.1387 (October 30 High), a break above targets 1.1446 (November 8 High). On the downside, support is seen at 1.1317 (November 9 Low), a break below could drag it till 1.1270 (November 15 Low).

USD/JPY: The dollar eased amid renewed concerns about the U.S.-China trade dispute after comments from U.S. President Donald Trump played down hopes of a trade truce with China. The major was trading 0.1 percent down at 113.49, having hit a high of 113.65 on Monday, its highest since November 16. FxWirePro's Hourly Yen Strength Index stood at -72.70 (Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Housing Price Index and speeches from Fed officials. Immediate resistance is located at 113.81 (November 7 High), a break above targets 114.14 (November 13 High). On the downside, support is seen at 113.07 (November 5 Low), a break below could take it lower 112.64 (November 16 Low).

GBP/USD: Sterling surged, halting a 2-day losing streak after Britain sealed a deal with the European Union on leaving the bloc, however, British Prime Minister Theresa May faces a hard political battle getting it approved by a divided parliament. The major traded 0.1 percent up at 1.2815, having hit a high of 1.2926 on Thursday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 36.13 (Neutral) 0500 GMT. Investors’ attention will remain UK CBI Distributive Trades Survey, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2946 (November 12 High), a break above could take it near 1.2990 (October 24 High). On the downside, support is seen at 1.2764 (November 21 Low), a break below targets 1.2723 (November 14 Low). Against the euro, the pound was trading 0.1 percent down at 88.49 pence, having hit a high of 88.35 on Monday, it’s highest since Nov. 16.

AUD/USD: The Australian dollar rose after falling for three consecutive sessions, as investors remained cautious before crucial trade talks between the leaders of the United States and China. The Aussie trades 0.2 percent up at 0.7235, having hit a low of 0.7212 on Monday; it’s lowest since November 21. FxWirePro's Hourly Aussie Strength Index stood at 5.19 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7182 (November 5 Low), a break below targets 0.7154. On the upside, resistance is located at 0.7270 (November 9 High), a break above could take it near 0.7319 (August 17 High).

NZD/USD: The New Zealand dollar rose, extending previous session gains, as Trump and his Chinese counterpart Xi Jinping are set to meet later this week at the G20 summit in Buenos Aires to ease growing trade tensions. However, the upside was limited after data showed bigger-than-expected New Zealand's October trade deficit of NZD 1,295 million. The Kiwi trades 0.2 percent up at 0.6780, having touched a low of 0.6753 earlier, its lowest level November 13. FxWirePro's Hourly Kiwi Strength Index was at -94.82 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6839 (November 15 High), a break above could take it near 0.6921 (June 25 High). On the downside, support is seen at 0.6727 (November 9 Low), a break below could drag it below 0.6700

Equities Recap

Asian shares rebounded after easing earlier in the session on U.S. President Donald Trump's comments that seemed to slash hopes of a trade truce with China.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.

Tokyo's Nikkei rose 0.6 percent to 21,950.14 points, Australia's S&P/ASX 200 index rallied 1.0 percent to 5,728.30 points and South Korea's KOSPI surged 0.7 percent to 2,097.83 points.

Shanghai composite index fell 0.2 percent to 2,570.42 points, while CSI300 index traded 0.3 percent down at 3,131.62 points.

Hong Kong’s Hang Seng traded 0.3 percent lower at 26,298.00 points. Taiwan shares added 0.2 percent to 9,778.62 points.

Commodities Recap

Crude oil prices declined, as mixed signals came from top exporter Saudi Arabia ahead of an OPEC meeting in Austria next week. International benchmark Brent crude was trading 0.4 percent down at $60.28 per barrel by 0512 GMT, having hit a low of $58.42 on Friday, its lowest since October 2017. U.S. West Texas Intermediate was trading 0.5 percent down at $51.33 a barrel, after falling as low as $50.14 on Monday, its lowest since the October 2017.

Gold prices consolidated within narrow ranges, as investors awaited clues on the pace of future U.S. interest rate hikes and as the U.S.-China trade dispute worsened ahead of a G20 summit. Spot gold was trading flat at $1,222.27 per ounce at 0515 GMT, having hit a high of $1229.93 on Wednesday, its highest since Nov. 7. U.S. gold futures were little changed at $1,222.1 per ounce.

Treasuries Recap

The Japanese government bonds traded flat during Asian session as well after the Bank of Japan’s (BoJ) core consumer price inflation (CPI) index remained tad higher on a y/y basis, ahead of the country’s retail sales and industrial production data for the month of October, scheduled to be released on November 28 and 29 respectively by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained flat at 0.090 percent, the yield on the long-term 30-year note hovered around 0.815 percent while the yield on short-term 2-year fell to -0.139 percent, from yesterday’s 0.143 percent.

The Australian government bonds traded tad lower during Asian session as investors’ risk appetite showed signs of improvement, tracking a similar movement in the United States’ Treasuries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 2.632 percent, the yield on the long-term 30-year bond traded flat at 3.156 percent and the yield on short-term 2-year traded nearly steady at 2.030 percent.

The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 2.5 Canadian cents to yield 2.245 percent and the 10-year declined 15 Canadian cents to yield 2.358 percent. On Friday, the 10-year yield touched its lowest in more than two months at 2.330 percent.

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