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Asia Roundup: Antipodeans surge on optimism over U.S.-China trade deal, sterling steadies amid Brexit uncertainty, Asian shares advance - Wednesday, December 12th, 2018

Market Roundup

  • Canada frees CFO of China's Huawei on bail; Trump might intervene
     
  • Trump says Fed shouldn't hike rates, but calls Powell 'a good man'
     
  • In heated on-camera clash, Trump fights with top Democrats on border wall
     
  • After Brexit vote delay, leadership challenge looms for May
     
  • Japan Nov Corp Goods Price YY, 2.3%, 2.4% f'cast, 2.9% prev
     
  • Japan Oct Machinery Orders YY, 4.5%, 5.9% f'cast, -7.0% prev
     
  • Australian consumers more confident on spending-survey
     

Economic Data Ahead

  • (0500 ET/1000 GMT) EZ Oct Industrial Production MM, 0.2% f'cast, -0.3% prev
     
  • (0500 ET/1000 GMT) EZ Oct Industrial Production YY, 0.7% f'cast, 0.9% prev

Key Events Ahead

  • (0830 ET/1330 GMT) ECB's Pentti Hakkarainen speaks at the inaugural meeting of the International Quality Network organized by the ECB in Frankfurt
     
  • (1155 ET/1655 GMT) German's Peter Altmaier speaks about the importance of sustainability for businesses and viniculture, Berlin
     

FX Beat

DXY: The dollar index eased after rallying to a 1-month peak in the prior session, as investors await the U.S. consumer price report later in the day, where an expected slowdown in headline inflation would reinforce speculation of fewer rate hikes from the Federal Reserve. The greenback against a basket of currencies trades 0.1 percent down at 97.40, having touched a low of 96.36 on Monday, its lowest since Nov 22. FxWirePro's Hourly Dollar Strength Index stood at 58.55 (Bullish) by 0400 GMT.

EUR/USD: The euro consolidated near a 2-week low touched in the previous session after the German government cut its economic growth forecast for 2018 as Economy Minister Peter Altmaier estimated an economic expansion of around 1.5 to 1.6 percent, below his previous prediction of 1.8 percent. The European currency traded 0.1 percent up at 1.1329, having touched a high of 1.1442 on Monday, its highest since Nov. 20. FxWirePro's Hourly Euro Strength Index stood at -46.64 (Neutral) by 0400 GMT. Investors’ attention will remain on EZ industrial production and EU's Juncker and Italy's Conte meet to discuss Italian budget, ahead of the U.S. consumer price index and monthly budget statement. Immediate resistance is located at 1.1401 (November 29 High), a break above targets 1.1455 (November 2 High). On the downside, support is seen at 1.1305 (November 30 Low), a break below could drag it till 1.1267 (November 28 Low).

USD/JPY: The dollar surged to a fresh 1-week peak, boosted by a rebound in U.S. government bond yields and on news that Beijing and Washington were discussing the next steps in their trade talks.  The major was trading 0.1 percent down at 113.43, having hit a low of 112.23 on Monday, its lowest since October 29. FxWirePro's Hourly Yen Strength Index stood at -77.81 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index and monthly budget statement. Immediate resistance is located at 113.66 (December 4 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 112.66 (October 23 Low), a break below could take it lower 112.08 (October 24 Low).

GBP/USD: Sterling steadied after plunging to a 20-month trough in the previous session in the wake of reports that Prime Minister Theresa May's Conservative Party had the 48 letters needed to trigger a no-confidence vote. The major traded 0.2 percent up at 1.2512, having hit a low of 1.2480 on Tuesday; it’s lowest since mid-April 2017. FxWirePro's Hourly Sterling Strength Index stood at -85.05 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2600, a break above could take it near 1.2664. On the downside, support is seen at 1.2460, a break below targets 1.2405. Against the euro, the pound was trading 0.1 percent up at 90.55 pence, having hit a low of 90.87 on Monday, it’s lowest since August 29.

AUD/USD: The Australian dollar rose, extending previous session gains, as U.S. President Donald Trump sounded upbeat about a trade deal with China. The Aussie trades 0.1 percent up at 0.7210, having hit a low of 0.7178 on Monday; it’s lowest since November 13. FxWirePro's Hourly Aussie Strength Index stood at 132.68 (Highly Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7164 (November 13 Low), a break below targets 0.7141 (September 17 Low). On the upside, resistance is located at 0.7268 (November 22 High), a break above could take it near 0.7325 (November 19 High).

NZD/USD: The New Zealand dollar edged higher, on increasing hopes that long-running U.S.-China trade tensions could ease. The Kiwi trades 0.1 percent up at 0.6879, having touched a low of 0.6840 on Monday, its lowest level Nov 29. FxWirePro's Hourly Kiwi Strength Index was at 112.08 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6939 (December 3 High), a break above could take it near 0.6976 (June 15 High). On the downside, support is seen at 0.6816 (November 9 Low), a break below could drag it below 0.6753 (November 27 Low).

Equities Recap

Asian shares advanced as U.S. President Donald Trump sounded optimistic about a trade deal with China.

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

Tokyo's Nikkei surged 2.2 percent to 21,602.75 points, Australia's S&P/ASX 200 index rallied 1.4 percent to 5,653.50 points and South Korea's KOSPI gained 1.2 percent to 2,084.77 points.

Shanghai composite index rose 0.3 percent to 2,602.67 points, while CSI300 index traded 0.4 percent up at 3,170.92 points.

Hong Kong’s Hang Seng traded 1.8 percent higher at 26,207.02 points. Taiwan shares added 1.4 percent to 9,816.45 points.

Commodities Recap

Crude oil prices surged, boosted by expectations that an OPEC-led supply cut announced last week for 2019 would stabilise markets. International benchmark Brent crude was trading 0.6 percent up at $60.81 per barrel by 0439 GMT, having hit a high of $63.67 on Friday, its highest since November 22. U.S. West Texas Intermediate was trading 0.7 percent up at $52.26 a barrel, after rising as high as $54.20 on Friday, its highest since the December 5.

Gold prices gained, halting a 2-day losing streak, supported by expectations of fewer rate hikes by the U.S. Federal Reserve next year. Spot gold rose 0.2 percent to $1,244.27 per ounce, as of 0450 GMT, having touched a high of $1,250.46 on Monday, its highest level since July 11. U.S. gold futures rose 0.2 percent to $1,249.9 per ounce.

Treasuries Recap

The Australian government bonds held gains across the curve during Asian session despite easing trade tensions between two economic behemoths. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.447 percent, the yield on the long-term 30-year bond also dipped 2-1/2 basis points to 2.978 percent and the yield on short-term 2-year down 1/2 basis point to 1.952 percent.

The Canadian government bond prices were lower across the yield curve, with the 10-year falling 15 Canadian cents to yield 2.077 percent. The gap between Canada's 10-year yield and its U.S. equivalent widened by 1.2 basis points to a spread of 80.8 basis points in favor of the U.S. bond, its widest since May 2017.

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