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Asia Roundup: Kiwi slumps as business confidence falls decade-low, dollar index steadies on NAFTA trade deal optimism, Asian shares slump - Thursday, August 30th, 2018

Market Roundup

  • Trump and Trudeau upbeat about prospects for NAFTA deal by Friday
     
  • Fed staff research anchors subtle shift that could lead rates higher
     
  • Trump hails Kim, sees no need to resume U.S.-South Korea war games
     
  • Trump presses Supreme Court chief justice for action on Russia dossier
     
  • New Zealand business confidence dips to decade-low as signs of reduced investment appear
     
  • IMF studying Argentina request for early help as peso crashes
     
  • Japan Jul Retail Sales (yy), 1.5%, 1.2% f'cast, 1.8% prev, 1.7% rvsd
     
  • Australia Jul Building Aprrovals, -5.2%, -2.5% f'cast, 6.4% prev, 6.8% rvsd
     
  • Australia Q2 Capital Expenditure, -2.5%, 0.6% f'cast, 0.4% prev, 1.2% rvsd
     
  • Australia Q2 Building Capex, -3.9%, 0.5% f'cast, -1.3% prev, -0.9% rvsd
     
  • Australia Q2 Plant/Machinery Capex, -0.9%, 1.0% f'cast, 2.5% prev, 3.6% rvsd
     

Economic Data Ahead

  • (0355 ET/0755 GMT) Germany Aug Unemployment Chg SA, -8k f'cast, -6k prev
     
  • (0355 ET/0755 GMT) Germany Unemployment Rate SA, 5.2% f'cast, 5.2% prev
     
  • (0500 ET/0900 GMT) EZ Aug Business Climate, 1.28 f'cast, 1.29 prev
     
  • (0500 ET/0900 GMT) EZ Aug Economic Sentiment, 111.9 f'cast, 112.1 prev
     
  • (0500 ET/0900 GMT) EZ Aug Industrial Sentiment, 5.5 f'cast, 5.8 prev
     
  • (0500 ET/0900 GMT) EZ Aug Services Sentiment, 15.1 f'cast, 15.3 prev
     
  • (0500 ET/0900 GMT) EZ Aug Consumer Confid. Final, -1.9 f'cast, -1.9 prev
     
  • (0800 ET/1200 GMT) Germany Aug CPI Prelim (yy), 2.0% f'cast, 2.0% prev
     

Key Events Ahead

  • (0345 ET/0745 GMT) Deutsche Bundesbank’s Claudia M Buch participates "Are post-crisis statistical initiatives completed?" in discussion. – Basel
     
  • (1330 ET/1730 GMT) Bundesbank’s Jens Weidmann speaks in Athens – Basel
     
  • N/A Banking conference in Frankfurt by German Finance Minister Olaf Scholz, UBS' Axel Weber, BaFin's Felix Hufeld, Deutsche Beorse's CEO, and Goldman Sachs' Germany chief. - Basel
     

FX Beat

DXY: The dollar index steadied after falling for four consecutive sessions after Canada rejoined the talks to modernize the 24-year-old NAFTA after Mexico and the United States announced a bilateral trade deal on Monday. The greenback against a basket of currencies trades 0.05 percent up at 94.52, having touched a low of 94.43 on Tuesday, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at 19.29 (Neural) by 0500 GMT.

EUR/USD: The euro eased after rising for six straight session sessions, ahead of the release of Eurozone sentiment index, which is expected to edge down to 112.1 in August from 112.0. The European currency traded 0.1 percent down at 1.1693, having touched a high of 1.1733 on Tuesday, its highest since July 31. FxWirePro's Hourly Euro Strength Index stood at 29.25 (Neutral) by 0500 GMT. Investors’ attention will remain on series of data from Eurozone economies, ahead of the U.S. personal consumption expenditures-price index and unemployment benefit claims. Immediate resistance is located at 1.1747 (July 31 High), a break above targets 1.1790 (July 9 High). On the downside, support is seen at 1.1647 (5-DMA), a break below could drag it till 1.1570 (10-DMA).

USD/JPY: The dollar consolidated near a 4-week peak after the leaders of the United States and Canada expressed optimism that NAFTA negotiations would meet a Friday deadline for a deal. Investors seem to refrain from taking big positions as ongoing developments on Brexit trade deal undermined market risk sentiment. The major was trading flat at 111.65, having hit a high of 111.82 on Wednesday, its highest since August 3. FxWirePro's Hourly Yen Strength Index stood at -107.58 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. personal consumption expenditures-price index and unemployment benefit claims. Immediate resistance is located at 111.95 (July 31 High), a break above targets 112.17 (July 11 High). On the downside, support is seen at 111.28 (5-DMA), a break below could take it lower 110.87 (10-DMA).

GBP/USD: Sterling held firm after rallying to a near 4-week peak earlier in the day, as concerns that Britain could go through a hard Brexit eased after European Union's chief negotiator Michel Barnier signalled an accommodative stance towards London in ongoing talks. The major traded 0.05 percent up at 1.3025, having hit a high of 1.3038 earlier; it’s highest since August 3. FxWirePro's Hourly Sterling Strength Index stood at 90.56 (Slightly Bullish) 0500 GMT. Immediate resistance is located at 1.3083 (July 19 High), a break above could take it near 1.3159 (July 24 High). On the downside, support is seen at 1.2888 (5-DMA), a break below targets 1.2799 (August 24 Low). Against the euro, the pound was trading 0.1 percent up at 89.76 pence, having hit a low of 90.98 on Tuesday, it’s lowest since September 2017.

AUD/USD: The Australian dollar slumped to a 6-day low after data showed domestic business investment surprisingly fell in the latest quarter, while the building approvals fell more than expected that could force the investors to scale back expectations of an RBA rate hike. The Aussie trades 0.3 percent down at 0.7289, having hit a low of 0.7238 on Friday; it’s lowest since August 16. FxWirePro's Hourly Aussie Strength Index stood at -125.02 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7256 (August 13 Low), a break below targets 0.7202 (August 15 Low). On the upside, resistance is located at 0.7381 (August 21 High), a break above could take it near 0.7411 (August 3 High).

NZD/USD: The New Zealand dollar fell to a near 1-week trough after a gauge of business confidence fell again in August to hit a decade low triggering fears that a slump in business sentiment would hurt hiring’s and spending which would in-turn dampen New Zealand's economic growth. The Kiwi trades 0.9 percent down at 0.6647, having touched a low of 0.6645, its lowest level since 24 August. FxWirePro's Hourly Kiwi Strength Index was at -131.05 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6746 (August 9 High), a break above could take it near 0.6793 (August 2 High). On the downside, support is seen at 0.6619 (August 24 Low), a break below could drag it below 0.6579 (August 17 Low).

Equities Recap

Asian shares tumbled as investors were relatively pessimistic and cautious over persisting concerns about the development of the U.S.-China trade war.

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

Tokyo's Nikkei surged 0.1 percent to 22,869.50 points, Australia's S&P/ASX 200 index fell 0.05 percent to 6,351.80 points, and South Korea's KOSPI gained 0.06 percent to 2,310.40 points.

Shanghai composite index fell 1.01 percent to 2,741.35 points, while CSI300 index traded 0.9 percent down at 3,354.36 points.

Hong Kong’s Hang Seng traded 0.9 percent lower at 28,157.86 points. Taiwan shares shed 0.05 percent to 11,093.75 points.

Commodities Recap

Crude oil prices declined, after rising to multi-week peaks in the previous session on the back of a fall in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela. International benchmark Brent crude was trading 0.05 percent down at $77.21 per barrel by 0507 GMT, having hit a high of $77.40 on Wednesday, its highest since July 11. U.S. West Texas Intermediate was trading 0.05 percent lower at $69.65 a barrel, after rising as high as $69.74, its highest since August 8.

Gold prices eased, reversing some of its previous session gains amid expectations of higher U.S. interest rates. Spot gold was 0.2 percent down at $1,203.66 an ounce at 0515 GMT, having hit a high of $1214.19 on Tuesday, its highest since August 10. U.S. gold futures were down 0.1 percent at $1,209.90 an ounce.

Treasuries Recap

The Japanese government bonds fell after the country’s retail sales for the month of July beat market expectations, albeit down from the previous reading in June, also revised lower. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1 basis point to 0.111 percent, the yield on the long-term 30-year note also gained 1 basis point to 0.852 percent and the yield on short-term 2-year hovered around -0.108 percent.

The Australian bond yields fell during the Asian session, tracking a similar movement in U.S. counterpart following an oversupply in the debt market after the United States Treasury Department auctioned off $31 billion in 7-year notes on Wednesday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1 basis point to 2.565 percent, the yield on the long-term 30-year bond jumped 1-1/2 basis points to 3.088 percent and the yield on short-term 2-year also rose nearly 1-1/2 basis points to 1.990 percent.

The Canadian government bond prices were higher across the yield curve, with the two-year up 1.5 Canadian cents to yield 2.14 percent and the 10-year rising 5 Canadian cents to yield 2.315 percent.

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