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Asia Roundup: Antipodeans ease on rate cut talks, greenback gains on U.S.-China trade deal hopes, investors’ eye UK employment report - Tuesday, April 16th, 2019

Market Roundup

  • China's home prices rise faster in March aided by policy support
     
  • Japan and U.S. hold "frank and good" trade talks - economy minister
     
  • Australia c.bank says easing would be "appropriate" if jobless rate rose, inflation stayed low
     
  • INTERVIEW-NZ central bank chief says easing bias remains for now
     
  • Fed's Rosengren says central bank should target an inflation range
     
  • Fed should 'communicate comfort' with slightly higher inflation -Evans
     
  • BOJ Gov Kuroda: No need to change 2 pct inflation target
     
  • EU says it is ready to launch U.S. trade talks, but without agriculture
     
  • Turkish finance minister says he had fruitful meetings at the White House
     

Economic Data Ahead

  • (0430 ET/0830 GMT) Great Britain Feb ILO Unemployment Rate, 3.9% f'cast, 3.9% prev
     
  • (0430 ET/0830 GMT) Great Britain Feb Employment Change, 180k f'cast, 222k prev
     
  • (0430 ET/0830 GMT) Great Britain Feb Avg Wk Earnings 3M YY, 3.5% f'cast, 3.4% prev
     
  • (0500 ET/0900 GMT) EZ Feb Construction Output MM, -1.38% prev
     
  • (0500 ET/0900 GMT) EZ Apr ZEW Survey Expectations, -2.5 prev
     
  • (0500 ET/0900 GMT) Germany Apr Zew Economic Sentiment, 0.8 f'cast, -3.6 prev
     
  • (0500 ET/0900 GMT) Germany Apr Zew Current Conditions, 8.0 f'cast, 11.1 prev
     

Key Events Ahead

  • N/A German economy minister Peter Altmaier speaks at local commerce chamber event in Chemnitz, Germany
     
  • (1300 ET/1700 GMT) Irish central bank governor Philip Lane to speak on "tail risks in the Irish economy" in Dublin
     
  • (1400 ET/1800 GMT) Dallas Fed's Robert Kaplan participates in a dorum hosted by Dallas Fed's El Paso branch in Hobbs, New Mexico
     
  • (1430 ET/1830 GMT) The 12 Federal Reserve banks release "2019 Small Business Credit Survey: Report on Employer Firms"
     

FX Beat

DXY: The dollar index gained after President Donald Trump's Treasury secretary, Steven Mnuchin, said that trade negotiators made a lot of progress. The greenback against a basket of currencies traded 0.05 percent up at 96.95, having touched a low of 96.75 on Friday, its lowest since Mar. 27. FxWirePro's Hourly Dollar Strength Index stood at -60.31 (Bearish) by 0400 GMT.

EUR/USD: The euro consolidated near a 3-week peak, after Greece Prime Minister Alexis Tsipras stated that repaying earlier expensive International Monetary Fund loans is a significant step for the nation which will create favourable conditions for its economy. The European currency traded flat at 1.1303, having touched a high of 1.1323 on Friday, its highest since Mar. 26. FxWirePro's Hourly Euro Strength Index stood at 114.96 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on German ZEW Survey and EZ construction output, ahead of the U.S. capacity utilization, industrial production, housing market index and Fed Kaplan's speech. Immediate resistance is located at 1.1331 (Mar. 25 High), a break above targets 1.1361 (Mar. 19 High). On the downside, support is seen at 1.1273 (Mar. 22 Low), a break below could drag it till 1.1213 (Mar. 28 Low).

USD/JPY: The dollar slightly edged lower after Federal Reserve Bank of Chicago President Charles Evans stated that the central bank should embrace inflation above its target half the time and consider cutting rates if prices do not rise as fast as expected. The major was trading 0.1 percent down at 111.95, having hit a high of 112.09 on Monday, its highest since Mar. 5. FxWirePro's Hourly Yen Strength Index stood at -35.31 (Neutral) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. capacity utilization, industrial production, housing market index and Fed Kaplan's speech. Immediate resistance is located at 112.60 (Dec. 20 High), a break above targets 113.24 (Dec. 5 High). On the downside, support is seen at 111.20 (Apr. 3 Low), a break below could take it lower at 110.53 (Mar. 20 Low).

GBP/USD: Sterling eased, halting a 2-day rally, as investors cautiously awaited UK labor market data, which is expected to show the British unemployment rate and average earnings excluding bonus may remain unchanged at 3.9 percent and 3.4 percent respectively. However, average earnings including bonus component may rise to 3.5 percent from 3.4 percent. Moreover, news that the UK that lawmakers are working to avoid no-deal Brexit supported the British pound. The major traded 0.05 percent down at 1.3091, having hit a high of 1.3132 on Friday; it’s highest since Apr. 4. FxWirePro's Hourly Sterling Strength Index stood at 12.93 (Neutral) 0400 GMT. Investors’ attention will remain on the UK average earnings and unemployment rate, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3121 (Apr. 5 High), a break above could take it near 1.3149 (Apr. 1 High). On the downside, support is seen at 1.3022 (Apr. 8 Low), a break below targets 1.3003 (Mar. 21 Low). Against the euro, the pound was trading 0.1 percent down at 86.35 pence, having hit a low of 86.57 on Friday, it’s lowest since Mar. 22.

AUD/USD: The Australian dollar slumped after Reserve Bank of Australia's April board meeting minutes released earlier in the day showed policymakers believed a cut in interest rates would be appropriate given inflation stays low and unemployment trend higher. The Aussie trades 0.3 percent down at 0.7148, having hit a high of 0.7192 on Friday; it’s highest since Feb. 27. FxWirePro's Hourly Aussie Strength Index stood at -51.13 (Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7128 (10-DMA), a break below targets 0.7070 (Mar. 29 Low). On the upside, resistance is located at 0.7198 (Feb. 27 High), a break above could take it near 0.7235 (Jan. 11 High).

NZD/USD: The New Zealand dollar slipped from an 11-day peak hit in the previous session after the Reserve Bank of New Zealand governor Adrian Orr said an easing bias remains in place for now and a softer global economy contributed to a recent shift to a dovish policy tone. The Kiwi trades 0.05 percent down at 0.6757, having touched a high of 0.6782 on Monday, its highest level Apr. 4. FxWirePro's Hourly Kiwi Strength Index was at 55.75 (Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6799 (Apr. 4 High), a break above could take it near 0.6827 (Mar. 5 High). On the downside, support is seen at 0.6706 (Jan. 22 Low), a break below could drag it below 0.6668 (Jan. 4 Low).

Equities Recap

Asian shares traded below 9-month highs after data showed new home prices in China grew slightly faster in March as Beijing rolled out stimulus to boost the economy.

MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.1 percent.

Tokyo's Nikkei rose 0.3 percent to 22,233.37 points, Australia's S&P/ASX 200 index gained 0.3 percent to 6,272.90 points and South Korea's KOSPI surged 0.2 percent to 2,247.07 points.

Shanghai composite index rose 1.4 percent to 3,221.94 points, while CSI 300 index traded 1.7 percent up at 4,044.14 points.

Hong Kong’s Hang Seng traded 0.7 percent higher at 30,009.43 points. Taiwan shares added 0.5 percent to 10,927.85 points

Commodities Recap

Crude oil prices declined after a Russian minister said the nation and OPEC may boost crude output to fight for market share. International benchmark Brent crude was trading 0.4 percent lower at $70.97 per barrel by 0414 GMT, having hit a high of $71.85 on Friday, its highest since Nov. 8. U.S. West Texas Intermediate was trading 0.4 percent down at $63.30 a barrel, after rising as high as $64.77 last week, its highest since the Nov. 1.

Gold prices plunged, extending losses for the fourth straight session as optimism over the U.S.-China trade talks helped investors retain risk appetite. Spot gold was 0.2 percent down at $1,285.22 per ounce by 0416 GMT, having touched a low of $1,282.43 on Monday, its lowest since April 4. U.S. gold futures shed about 0.2 percent at $1,289.20 an ounce.

Treasuries Recap

The 10-year U.S. Treasury yield was at 2.550 percent, edging back from a 4-week high of 2.574 percent reached on Monday.

The Australian government bond futures rose, with the three-year bond contract up 3 ticks at 98.575. The 10-year contract firmed 2.5 ticks to 98.0650.

The Canadian government bond prices were higher across the yield curve, with the two-year up 6.5 Canadian cents to yield 1.603 percent and the 10-year rising 28 Canadian cents to yield 1.750 percent. The gap between Canada's two-year yield and its U.S. equivalent widened by 2.6 basis points to a spread of 78.6 basis points in favor of the U.S. bond.

By Lactus Fernandes
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