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Asia Roundup: Kiwi steadies as RBNZ rate cut concerns ease, yen rallies amid caution over U.S.-China trade talks, Asian shares surge - Monday, October 7th, 2019

Market Roundup

  • Gold edges higher ahead of U.S.-China trade talks
     
  • U.S. unemployment rate dropped to the lowest in almost 50 years

Economic Data Ahead

  • (0330 ET/0730 GMT) UK Halifax House Prices MoM September
     
  • (0430 ET/0830 GMT) EZ Sentix Investor Confidence October
     

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index rebounded as Friday's data showed U.S. jobs growth increased modestly in September. U.S. nonfarm payrolls increased by 136,000 jobs last month, while August data was revised to show 168,000 jobs created instead of the previously reported 130,000. The greenback against a basket of currencies traded 0.05 percent up at 98.87, having touched a low of 98.64 on Thursday, its highest since September 25.

EUR/USD: The euro eased, halting a 4-day rally as concern grew that the European Central Bank had only limited room to boost growth and inflation. However, the downside appears limited as revised data released on Friday showed the Italian economy grew slightly more than previously in the first half of this year. The European currency traded flat at 1.0978, having touched a high of 1.0999 on Thursday, its highest since September 25. Investors’ attention will remain on a series of data out from the Eurozone economies and EZ sentix investor confidence, ahead of the U.S. consumer credit change and Fed Chair Powell's speech. Immediate resistance is located at 1.1021 (61.8% retracement of 1.1109 and 1.0879), a break above targets 1.1060 (78.6% retracement). On the downside, support is seen at 1.0945 (5-DMA), a break below could drag it below 1.0904.

USD/JPY: The dollar plunged, extending losses for the fifth straight session, as risk sentiment weakened after Bloomberg reported that Chinese officials are signalling they are reluctant to agree to a broad deal pursued by U.S. President Donald Trump. The major was trading 0.05 percent down at 106.84, having hit a low of 106.48 on Thursday, its lowest since September 24. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer credit change and Fed Chair Powell's speech. Immediate resistance is located at 107.36 (5-DMA), a break above targets 107.58 (September 10 High). On the downside, support is seen at 106.32 (September 5 Low), a break below could take it near at 106.02 (August 16 Low).

GBP/USD: Sterling eased as investors remained cautious amid uncertainties over Brexit deal. British Prime Minister Boris Johnson is still seeking significant changes to how the issue of the Irish border is dealt ahead of UK’s scheduled exit from the European Union on October 31. The major traded 0.05 percent down at 1.2322, having hit a high of 1.2413 on Thursday, it’s highest since September 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2376 (21-DMA), a break above could take it near 1.2400. On the downside, support is seen at 1.2270 (September 27 Low), a break below targets 1.2233 (September 9 Low). Against the euro, the pound was trading 0.2 percent down at 89.13 pence, having hit a low of 89.36 on Thursday, it’s lowest since Sept. 13.

AUD/USD: The Australian dollar declined as investors nervously awaited U.S.-China talks this week for signs of whether the two sides can de-escalate or end their trade war. The Aussie trades 0.3 percent down at 0.6749, having hit a high of 0.6773 on Friday, it’s highest since October 1. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6687, a break below targets 0.6635. On the upside, resistance is located at 0.6799 (August 21 High), a break above could take it near 0.6803 (September 25 High).

NZD/USD: The New Zealand dollar edged higher after the Reserve Bank of New Zealand said that new information it had received since the last Monetary Policy Statement by the bank in August did not warrant a significant change to the monetary policy outlook. The Kiwi trades 0.05 percent up at 0.6315, having touched a high of 0.6336 on Friday, its highest level since September 25. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6348 (September 25 High), a break above could take it near 0.6391 (September 16 High). On the downside, support is seen at 0.6277 (5-DMA), a break below could drag it below 0.6249.

Equities Recap

Asian stocks surged after data showed the U.S. unemployment rate declined to the lowest in almost 50 years, easing concerns of a slowdown in the economy.

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

Tokyo's Nikkei eased 0.2 percent to 21,368.63 points, Australia's S&P/ASX 200 index rallied 0.7 percent to 6,563.60 points.

South Korea's KOSPI rose 0.1 percent to 2,022.51 points, Taiwan shares added 0.4 percent to 10,935.06 points.

Chinese markets remained closed.

Commodities Recap

Crude oil prices eased, halting a 2-day rally, amid fears the global economic slowdown will weigh on future oil demand growth. International benchmark Brent crude was trading 0.3 percent up at $58.01 per barrel by 0517 GMT, having hit a low of $57.13 on Thursday, its lowest since August 7. U.S. West Texas Intermediate was trading 0.1 percent lower at $52.84 a barrel, after falling as low as $52.27 on Thursday, its lowest since August 7.

Gold prices edged higher, reversing most of its previous session losses, as investors were cautious ahead of this week’s U.S.-China trade talks following a report that Beijing would likely disagree to a broad trade deal with the United States. Spot gold gained 0.1 percent to $1,504.93 per ounce by 0525 GMT, having touched a high of $1,519.53 on Thursday, its highest since September 25. U.S. gold futures were little changed at $1,513.30 per ounce.

Treasuries Recap

The Japanese government bonds firmed as investors turned cautious about the outcome of U.S.-China trade talks. The benchmark 10-year JGB futures rose 0.06 point to 155.21. The 10-year JGB yield fell 1 basis point to minus 0.225 percent, declining further from its 2-month high of minus 0.145 percent. The five-year yield fell 0.5 basis point to minus 0.375 percent, inching towards a record low of minus 0.400 percent touched last month. Longer maturities were little changed with both the 20-year JGB yield and 30-year yield flat at 0.180 percent and 0.350 percent.

The Australian government bonds opened on a higher note on the first trading day of the week, tracking a similar movement in the United States Treasuries following global economic concerns, after employment data in the U.S. disappointed market sentiments. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 0.878 percent, the yield on the long-term 30-year bond suffered 2-1/2 basis points to 1.491 percent and the yield on short-term 2-year too traded 2 basis points lower at 0.617 percent.

By Lactus Fernandes
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