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Asia Roundup: Antipodeans consolidate near recent lows, yen at 3-month peak as U.S., Iran exchange threats, Asian shares slump - Monday, January 6th, 2020

Market Roundup

  • Gold jumps to near 7-year high
     
  • Oil surges after Trump threatens Iraq sanctions

Economic Data Ahead

  • (0200 ET/0700 GMT) German retail sales
     
  • (0355 ET/0855 GMT) German Markit PMI composite
     
  • (0355 ET/0855 GMT) German Markit PMI services
     
  • (0400 ET/0900 GMT) EZ Markit PMI composite
     
  • (0400 ET/0900 GMT) EZ Markit PMI services
     
  • (0500 ET/1000 GMT) EZ producer price index
     

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index fell, halting a 2-day rally, after minutes of the Federal Reserve’s Dec. 10-11 policy meeting, released on Friday, showed policymakers agreed that interest rates were likely to stay on hold for a time as the central bank set its sights on a new articulation of its monetary policy framework. The greenback against a basket of currencies traded down at 96.84, having touched a low of 96.36 on Tuesday, its lowest since July 1.    

EUR/USD: The euro steadied after tumbling to a 1-week low in the previous session on data that showed German unemployment rose more than expected in December, adding to signs that weakness in the manufacturing sector is hurting the labor market. Separate data published on Friday showed that German inflation remained subdued in December. The European currency traded 0.1 percent up at 1.1167, having touched a high of 1.1239 on Wednesday, its highest since August 7. Investors’ attention will remain on a series of data from the eurozone economies, EZ producer price index and Markit PMI's, ahead of the U.S. Markit service and composite PMI. Immediate resistance is located at 1.1188, a break above targets 1.1220. On the downside, support is seen at 1.1138 (10-DMA), a break below could drag it below 1.1122.

USD/JPY: The dollar plunged to a near 3-month trough, as increasing tensions between Iran and the United States sent investors into safe-haven assets. The major was trading 0.05 percent down at 108.06, having hit a low of 107.77 earlier, its lowest since Oct. 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. U.S. Markit service and composite PMI. Immediate resistance is located at 108.25, a break above targets 108.46. On the downside, support is seen at 107.52, a break below could take it near at 107.03.

GBP/USD: Sterling consolidated near a 1-week low as investors sentiment weakened following last week's downbeat data on construction and consumer demand, and heightening worries for an economy showing no sign of emerging from Brexit-linked gloom. The major traded flat at 1.3084, having hit a low of 1.3053 on Friday, it’s lowest since Dec. 27. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3129 (5-DMA), a break above could take it near 1.3181. On the downside, support is seen at 1.3050, a break below targets 1.2989. Against the euro, the pound was trading 0.05 percent down at 85.34 pence, having hit a high of 84.53 on Wednesday, it’s highest since Dec. 17.

AUD/USD: The Australian dollar eased, hovering towards a 1-week low hit in the previous session, amid mounting tensions in the Middle East. The Aussie trades 0.05 percent down at 0.6941, having hit a low of 0.6930 on Friday, it’s lowest since Dec. 26. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6912, a break below targets 0.6882. On the upside, resistance is located at 0.6985 (5-DMA), a break above could take it near 0.7004.

NZD/USD: The New Zealand dollar declined, extending losses for the third straight session after U.S. Secretary of State Mike Pompeo said Washington would target any Iranian decision-makers it chose if there were further attacks on U.S. interests by Iranian forces or their proxies. The Kiwi trades 0.1 percent down at 0.6653, having touched a low of 0.6644 on Friday, its lowest level since Dec. 26. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6703 (5-DMA), a break above could take it near 0.6736. On the downside, support is seen at 0.6615 (21-DMA), a break below could drag it below 0.6572.

Equities Recap

Asian shares tumbled after the United States detected a heightened state of alert by Iran’s missile forces, as President Donald Trump warned the U.S. would strike back, if Iran attacked any American person or target.

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

Tokyo's Nikkei plunged 1.9 percent to 23,201.02 points, Australia's S&P/ASX 200 index eased 0.1 percent to 6,726.30 points and South Korea's KOSPI fell 0.9 percent to 2,155.07 points.

Shanghai composite index rose 0.6 percent to 3,101.98 points, while CSI 300 index traded 0.5 percent up at 4,165.50 points.

Hong Kong’s Hang Seng traded 0.8 percent lower at 28,261.56 points. Taiwan shares shed 1.2 percent to 11,969.76 points.

Commodities Recap

Crude oil prices rallied by more than 2 percent after U.S. President Donald Trump issued a threat to impose sanctions on Iraq amid escalating tensions with Iran in the Middle East. International benchmark Brent crude was trading 2.8 percent at $70.53 per barrel by 0330 GMT, having hit a high of $70.54 earlier, its highest since May 28. U.S. West Texas Intermediate was trading 2.2 percent up at $64.43 a barrel, after rising as high as $64.48 earlier, its highest since April 30.

Gold surged to its highest in nearly seven years, as intensifying tensions in the Middle East drove investors towards safe-haven assets. Spot gold rose 1.8 percent to $1,578.94 per ounce by 0336 GMT, having touched a high of $1588.16 earlier, its highest since September 5. U.S. gold futures gained 1.6 percent to $1,577.80.

Treasuries Recap

The Australian bonds surged during Asian session of the first trading day of the week as investors turned risk-averse, after the United States’ carried out a strike on Iranian military general Soleimani. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 5 basis points to 1.212 percent, the yield on the long-term 30-year bond slumped 5-1/2 basis points to 1.824 percent and the yield on short-term 2-year suffered 3-1/2 basis points to 0.797 percent.

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