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Asia Roundup: Antipodeans off peaks on soft Chinese data, greenback eases on weak CPI, Asian shares slump - Monday, January 14th, 2019

Market Roundup

  • China Dec Exports YY, -4.4%, 3.0% f'cast, 5.4% prev
     
  • China Dec Imports YY, -7.6%, 5.0% f'cast, 3.0% prev
     
  • China Dec Trade Balance USD, 57.06 bln, 51.53 bln f'cast, 44.71 bln prev
     
  • China to boost QFII quota to $300 bln from $150 bln
     
  • Ahead of vote, UK PM May warns it would be catastrophic to halt Brexit
     
  • Brexit takes toll on Britain's financial sector, outlook weak
     
  • Republican Sen. Graham urges Trump to open US government temporarily
     
  • With 2,300-word letter, Macron launches debate to quell 'yellow vest' unrest
     

Economic Data Ahead

  • (0500 ET/1000 GMT) EZ Nov Industrial Production MM, -1.5% f'cast, 0.2% prev
     
  • (0500 ET/1000 GMT) EZ Nov Industrial Production YY, -2.3% f'cast, 1.2% prev

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index plunged as investors expect the worries of slowing domestic and global growth as well as tame U.S. inflation will make Fed policymakers hesitant to hike the interest rates. Data released on Friday showed that U.S. consumer prices in December fell for the first time in nine months. The greenback against a basket of currencies trades 0.1 percent down at 95.54, having touched a low of 95.03 on Thursday, its lowest since Oct. 16. FxWirePro's Hourly Dollar Strength Index stood at -31.16 (Neutral) by 0500 GMT.

EUR/USD: The euro rebounded after falling to a near 1-week low on data that showed Italy was at risk of recession. The European currency traded 0.1 percent up at 1.1476, having touched a high of 1.1569 on Thursday, its highest since Oct. 17. FxWirePro's Hourly Euro Strength Index stood at 10.53 (Neutral) by 0500 GMT. Investors’ attention will remain on the Eurozone industrial production, amid a lack of data from the U.S. docket. Immediate resistance is located at 1.1500 (November 7 High), a break above targets 1.1599 (October 11 High). On the downside, support is seen at 1.1422 (Jan. 8 Low), a break below could drag it till 1.1394 (Jan. 7 Low).

USD/JPY: The dollar declined, as investor risk sentiment weakened after lacklustre Chinese data reflected a slowdown in the world's second-largest economy. China's December exports unexpectedly fell 4.4 percent from a year earlier, recording its biggest monthly drop in two years. The major was trading 0.4 percent down at 108.12, having hit a low of 107.77 earlier in the month, its lowest since Jan 4. FxWirePro's Hourly Yen Strength Index stood at 79.99 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 109.08 (January 8 High), a break above targets 109.46 (April 26 High). On the downside, support is seen at 107.65 (April 23 Low), a break below could take it lower 107.35 (April 20 Low).

GBP/USD: Sterling steadied near a 1-1/2 month peak touched in the prior session amid growing expectations that Britain will seek to delay its scheduled departure date from the European Union. The major traded 0.1 percent up at 1.2843, having hit a high of 1.2865 on Friday; it’s highest since November 23. FxWirePro's Hourly Sterling Strength Index stood at 96.01 (Slightly Bullish) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal amid a lack of U.S. fundamental drivers. Immediate resistance is located at 1.2884 (November 19 High), a break above could take it near 1.2946 (November 12 High). On the downside, support is seen at 1.2776 (November 20 Low), a break below targets 1.2706 (January 8 Low). Against the euro, the pound was trading 0.1 percent down at 89.35 pence, having hit a high of 89.09, it’s highest since December 7.

AUD/USD: The Australian dollar slumped from a 1-month peak as investor sentiments were hurt after data showed that China's December exports unexpectedly fell 4.4 percent from a year earlier, indicating a further weakening in the world's second-largest economy. The Aussie trades 0.4 percent down at 0.7186, having hit a high of 0.7234 on Friday; it’s highest since December 13. FxWirePro's Hourly Aussie Strength Index stood at -35.99 (Neutral) by 0500 GMT. Immediate support is seen at 0.7116 (January 8 Low), a break below targets 0.7085 (December 20 Low). On the upside, resistance is located at 0.7246 (December 13 High), a break above could take it near 0.7273 (December 6 High).

NZD/USD: The New Zealand dollar eased from a 3-week peak after surprisingly soft Chinese trade data stoked concerns the tariff standoff with the United States was taking a hit on China's economy. The Kiwi trades 0.4 percent down at 0.6806, having touched a high of 0.6843 on Friday, its highest level December 19. FxWirePro's Hourly Kiwi Strength Index was at 26.09 (Neutral) by 0500 GMT. Immediate resistance is located at 0.6853 (Nov. 21 High), a break above could take it near 0.6880 (Dec. 18 High). On the downside, support is seen at 0.6726 (Jan. 7 Low), a break below could drag it below 0.6691 (Dec. 31 Low).

Equities Recap

Asian shares tumbled as disappointing numbers reinforced fears U.S. tariffs on Chinese goods were denting China's economy.

MSCI's broadest index of Asia-Pacific shares outside Japan extended previous session losses.

Australia's S&P/ASX 200 index fell 0.05 percent to 5,773.40 points and South Korea's KOSPI eased 0.7 percent to 2,060.65 points.

Shanghai composite index declned 0.7 percent to 2,536.16 points, while CSI300 index traded 0.8 percent down at 3,068.14 points.

Hong Kong’s Hang Seng traded 1.5 percent lower at 26,257.84 points. Taiwan shares shed 0.5 percent to 9,708.22 points.

Commodities Recap

Crude oil prices declined by more than 1 percent after Chinese data showed weakening imports and exports. International benchmark Brent crude was trading 1.05 percent down at $59.83 per barrel by 0502 GMT, having hit a high of $62.46 on Friday, its highest since December 7. U.S. West Texas Intermediate was trading 1.1 percent lower at $51.04 a barrel, after rising as high as $53.29 on Friday, its highest since the December 7.

Gold prices rose, extending previous session gains as the dollar eased on expectations that the U.S. Federal Reserve will not hike rates this year. Spot gold surged 0.2 percent at $1,290.21 per ounce, as of 0507 GMT, having touched a high of $1,298.42 earlier in the month, its highest level since June 15. U.S. gold futures were up 0.2 percent at $1,291.40 per ounce.

Treasuries Recap

The Australian government bond yields continued to track fall in the United States counterpart after Federal Reserve Chair Jerome Powell released a series of dovish comments during last week, pointing towards a slower rate of policy tightening this year. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 3-1/2 basis points to  2.274 percent, the yield on the long-term 30-year bond slumped nearly 3 basis points to 2.812 percent and the yield on short-term 2-year traded 3 basis points lower at 1.867 percent.

The yields on New Zealand government bonds dipped as much as 5 basis points at the long end of the curve.

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