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Asia Roundup: Antipodeans ease as U.S. hikes tariffs on Chinese goods; yen at 3-month peak amid risk-averse sentiment; Asian shares trim gains - Friday, May 10th, 2019 

Market Roundup

  • US hikes tariffs on Chinese goods, China says to strike back
     
  • Australia c.bank cuts forecasts again, signals rate cuts
     
  • Recession risks prod BOJ to strengthen forward guidance in April
     
  • Japan Real wages fall 2.5 pct in March, biggest fall in four years
     
  • Japan Mar All Household Spending YY, 2.1%, 1.7% f'cast, 1.7% prev
     
  • N.Korea's Kim orders stronger strike power; U.S. seizes cargo ship
     
  • ANC takes commanding lead in South Africa's election but support ebbs
     
  • Australia's opposition Labor pledges bigger budget surpluses in election bid
     
  • Foreign CB US debt holdings +$331 mln to $3.461 tln May 8 week
     
  • Treasuries -$670 mln to $3.056 tln, agencies +$188 mln to $332.142 bln
     
  • U.S.-based equity funds post $12.7 bln of cash withdrawals -Lipper
     

Economic Data Ahead

  • (0245 ET/0645 GMT) France Mar Industrial Output MM, -0.5% f'cast, 0.4% prev
     
  • (0430 ET/0830 GMT) Great Britain Q1 Business Invest YY Prelim, -2.5% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar GDP Estimate YY, 2.0% f'cast, 2.0% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar Industrial Output YY, 0.5% f'cast, 0.1% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar Manufacturing Output YY, 1.3% f'cast, 0.6% prev
     
  • (0430 ET/0830 GMT) Great Britain Q1 GDP Prelim YY, 1.8% f'cast, 1.4% prev
     

Key Events Ahead

  • (0330 ET/0730 GMT) ECB board member Sabine Lautenschlager participates in a panel discussion at G7 2019 conference in Paris
     
  • (0330 ET/0730 GMT) ECB policymaker and Bank of France governor Francois Villeroy opens a conference at the French central bank in Paris
     
  • (0510 ET/0910 GMT) Riksbank First Deputy Governor Kerstin af Jochnick talks about developments in the payment market during the Stockholm Future Forum in Stockholm
     
  • (0700 ET/1100 GMT) Riksbank meeting of the General Council in Stockholm
     
  • (0830 ET/1230 GMT) Fed's Brainard speaks at Federal Reserve System Community Development Research Conference in Washington, D.C.
     
  • (0908 ET/1308 GMT) Atlanta Fed President Raphael Bostic speaks on the economic outlook and monetary policy in Meridian, Mississippi
     
  • (1000 ET/1400 GMT) New York Fed President John Williams speaks before the 21st Annual Bronx Bankers' Breakfast in Bronx, New York
     
  • (1030 ET/1430 GMT) ECB board member Benoit Coeure participates in a panel discussion at G7 2019 Conference in Paris
     

FX Beat

DXY: The dollar index declined, extending previous session loses, after China's Commerce Ministry said it deeply regretted the U.S. decision to hike tariffs on Chinese goods, adding that it would take necessary countermeasures. The greenback against a basket of currencies traded 0.05 percent down at 97.35, having touched a low of 97.24 on Thursday, its lowest since May 1. FxWirePro's Hourly Dollar Strength Index stood at -36.22 (Neutral) by 0400 GMT.

EUR/USD: The euro surged, hovering towards a 1-week peak hit in the previous session, as the greenback eased after a series of data indicated the U.S. manufacturers are experiencing the most marked deceleration in business activity since 2015 and before that the great recession of 2008. The European currency traded 0.1 percent up at 1.1226, having touched a high of 1.1251 on Thursday, its highest since May 1. FxWirePro's Hourly Euro Strength Index stood at -3.67 (Neutral) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies and ECB Lautenschlager and Coueure's speech, ahead of the U.S. consumer price index, monthly budget statement and speeches by Fed's Brainard and Bostic. Immediate resistance is located at 1.1262 (April 22 High), a break above targets 1.1304 (April 18 High). On the downside, support is seen at 1.1187 (May 1 Low) a break below could drag it till 1.1140 (April 24 Low).

USD/JPY: The dollar plunged, drifting closer to a 3-month trough hit in the previous session, after U.S. President Donald Trump's tariff increase to 25 percent on $200 billion worth of Chinese goods took effect today, and Beijing said it would retaliate. The major was trading 0.1 percent down at 109.66, having hit a low of 109.47 earlier, its lowest since Feb. 4. FxWirePro's Hourly Yen Strength Index stood at 196.42 (Highly Bullish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index, monthly budget statement and speeches by Fed's Brainard and Bostic. Immediate resistance is located at 110.32 (38.2% retracement of 111.68 and 109.47), a break above targets 110.84 (61.8% retracement). On the downside, support is seen at 109.47 (May 9 Low), a break below could take it lower at 109.13 (Jan. 29 Low).

GBP/USD: Sterling consolidated near the 1.3000 handle, amid doubts that Brexit negotiations between the ruling Conservative and opposition Labour parties would progress. The major traded flat at 1.3002, having hit a low of 1.2967 on Thursday; it’s lowest since Apr. 30. FxWirePro's Hourly Sterling Strength Index stood at -90.00 (Slightly Bearish) 0400 GMT. Investors’ attention will remain on the UK preliminary gross domestic product, manufacturing production, industrial prod., goods trade balance, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3066 (5-DMA), a break above could take it near 1.3132 (Apr. 12 High). On the downside, support is seen at 1.2976 (Mar. 29 Low), a break below targets 1.2923 (Apr. 30 Low). Against the euro, the pound was trading 0.1 percent down at 86.33 pence, having hit a low of 86.48 on Thursday, it’s lowest since Apr. 30.

AUD/USD: The Australian dollar turned lower after U.S. President Donald Trump's tariff increase to 25 percent on $200 billion worth of Chinese goods took effect. The Aussie trades 0.05 percent down at 0.6985, having hit a low of 0.6962 on Monday, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at -52.47 (Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6950, a break below targets 0.6921. On the upside, resistance is located at 0.7069 (Apr. 30 High), a break above could take it near 0.7110 (Mar. 19 High).

NZD/USD: The New Zealand dollar eased as tensions between the United States and China deepened following Trump's tariff hike on $200 bln of Chinese goods. The Kiwi trades 0.5 percent down at 0.6585, having touched a low of 0.6525 on Wednesday, its lowest level Nov. 1. FxWirePro's Hourly Kiwi Strength Index was at -54.00 (Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6653 (May 3 High), a break above could take it near 0.6694 (Apr. 19 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 trimmed gains as tensions between U.S. and Chine intensified after U.S. President Donald Trump's tariff increase on $200 billion worth of Chinese goods took effect.

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

Tokyo's Nikkei fell 0.6 percent to 21,303.55 points, Australia's S&P/ASX 200 index gained 0.3 percent to 6,312.20 points and South Korea's KOSPI surged 0.1 percent to 2,103.06 points.

Shanghai composite index rose 2.2 percent to 2,918.58 points, while CSI 300 index traded 2.4 percent up at 3,684.37 points.

Hong Kong’s Hang Seng traded 0.9 percent higher at 28,576.69 points. Taiwan shares shed 0.2 percent to 10,712.99 points

Commodities Recap

Crude oil prices rose amid renewed optimism that a trade deal between Washington and Beijing could be struck, while investors fear that a protracted tariff war would dent global economic growth. International benchmark Brent crude was trading 0.5 percent higher at $70.57 per barrel by 0425 GMT, having hit a low of $68.82 on Monday, its lowest since Apr, 3. U.S. West Texas Intermediate was trading 0.5 percent up at $61.93 a barrel, after falling as low as $60.02 on Monday, its lowest since the Mar, 29.

Gold prices rallied and were on track for a weekly gain as investors rushed into safe-haven assets on worries that a rift over trade between the United States and China could deepen if talks between the two economies fail to reach a deal. Spot gold was trading 0.2 percent up at $1,285.02 per ounce by 0430 GMT, having touched a high of $1,291.36 on Wednesday, its highest since Apr. 15  and is up about 0.4 percent for the week. U.S. gold futures were also steady at $1,284.30 an ounce.

Treasuries Recap

The Japanese government bond prices edged up, with the five-year JGB yield and the 10-year yield both easing half a basis point to minus 0.170 percent and minus 0.055 percent, respectively. In the super-long zone, the 30-year yield dipped 0.5 basis point to 0.530 percent, while the 40-year yield was also off half a basis point at 0.555 percent. Ten-year JGB futures ticked up 0.05 point to 152.81.

The Australian bond futures held near record highs, with the three-year contract steady at 98.745 and the 10-year off one tick at 98.2650.

The New Zealand two-year yields were at 1.44 percent, up from an all-time low of 1.338 percent touched on Wednesday.

The Canadian government bond prices were higher across the yield curve. The two-year rose 2.7 Canadian cents to yield 1.583 percent and the 10-year climbed 20 Canadian cents to yield 1.685 percent.

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