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Asia Roundup: Aussie at 1-month low on downbeat employment data, dollar eases against yen amid renewed U.S.-China trade deal concerns, Asian shares slump - Thursday, November 14th, 2019

Market Roundup

  • Australian Unemployment Unexpectedly Climbs
     
  • Oil rises as U.S. crude stocks decline
     
  • China's growth slowdown deepens
     

Economic Data Ahead

  • (0430 ET/0930 GMT) UK retail sales YoY
     
  • (0430 ET/0930 GMT) UK retail sales MoM
     
  • (0500 ET/1000 GMT) EZ GDP Q3
     
  • (0500 ET/1000 GMT) EZ employment change
     

Key Events Ahead

  • (0445 ET/0945 GMT) ECB De Guindos gives a speech
     
  • (0600 ET/1100 GMT) ECB Lane's speech
     

FX Beat

DXY: The dollar index surged after U.S. Federal Reserve Chair Jerome Powell on Wednesday told the Joint Economic Committee that negative interest rates sought by Trump are not appropriate for the U.S. economy right now. The greenback against a basket of currencies traded 0.1 percent up at 98.41, having touched a high of 98.45 on Wednesday, its highest since October 15.

EUR/USD: The euro slumped to a 1-month low after yesterday's data showed the German economy contracted by 0.1 percent during the second quarter. However, the downside appears limited as political concerns in Spain eased after Socialists agreed a coalition with the far-left Unidas Podemos party. The European currency traded 0.1 percent down at 1.0996, having touched a low of 1.0995 earlier, its lowest since October 15. Investors’ attention will remain on a series of data from the Eurozone economies, EZ gross domestic product and employment change, ahead of the U.S. producer price index, unemployment benefit claims and Fed officials' speeches. Immediate resistance is located at 1.1042, a break above targets 1.1062. On the downside, support is seen at 1.0985, a break below could drag it below 1.0957.

USD/JPY: The dollar plunged to an over 1-week low as the trade talks negotiations between the U.S. and China stalled after China expressed it did not want a deal that looked one-sided in the favor of the United States. Moreover, data showing China’s industrial production growth slowed sharply in October, rising 4.7 percent year-on-year, missing forecasts of 5.4 percent, while retail sales also slowed to fall short of expectations and investment growth hit a record low further undermined the bid tone around the pair. The major was trading 0.1 percent down at 108.71, having hit a low of 108.62 earlier, its lowest since November 5. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index, unemployment benefit claims and Fed officials' speeches. Immediate resistance is located at 109.07 (5-DMA), a break above targets 109.62 (May 31 High). On the downside, support is seen at 108.49, a break below could take it near at 108.24.

GBP/USD: Sterling tumbled after data released yesterday showed, UK's inflation fell in October to its lowest level in nearly three years, adding to expectations that the Bank of England’s next move might be an interest rate cut. The major traded 0.2 percent down at 1.2830, having hit a high of 1.2897 on Monday, it’s highest since November 5. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2904, a break above could take it near 1.2972 (November 1 High). On the downside, support is seen at 1.2806, a break below targets 1.2768. Against the euro, the pound was trading 0.1 percent down at 85.71 pence, having hit a high of 85.57 on Monday, it’s highest since May 8.

AUD/USD: The Australian dollar tumbled to a near 1-month low after data showed domestic unemployment rate increased and the economy shed jobs for the first time in 17 months, adding to evidence that central bank interest-rate cuts are failing to gain much traction. The jobless rate increased to 5.3 percent in October from 5.2 percent, while the under-utilization rate, which combines unemployment and under-employment, rose 0.3 point to 13.8 percent. The Aussie trades 0.5 percent down at 0.6799, having hit a low of 0.6795 earlier, it’s lowest since October 17. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6784, a break below targets 0.6758. On the upside, resistance is located at 0.6876, a break above could take it near 0.6907.

NZD/USD: The New Zealand dollar declined from a 9-day peak, weighed down by doubts over whether the United States and China will be able to reach a preliminary trade deal. The Kiwi trades 0.3 percent down at 0.6392, having touched a high of 0.6418 earlier, its highest level since November 5. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6426, a break above could take it near 0.6435. On the downside, support is seen at 0.6373 (21-DMA), a break below could drag it below 0.6326.

Equities Recap

Asian shares declined after China's soft economic data showed the trade war between Beijing and Washington hitting growth in the Chinese economy.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 percent.

Tokyo's Nikkei declined 0.8 percent to 23,141.55 points, Australia's S&P/ASX 200 index surged 0.6 percent to 6,735.10 points and South Korea's KOSPI rallied 0.2 percent to 2,126.93 points.

Shanghai composite index rose 0.2 percent to 2,909.53 points, while CSI 300 index traded 0.2 percent up at 3,905.82 points.

Hong Kong’s Hang Seng traded 0.9 percent lower at 26,339.29 points. Taiwan shares shed 0.2 percent to 11,450.42 points.

Commodities Recap

Crude oil prices rose to a 1-week peak, following an industry report showing a decline in U.S. crude stockpiles last week. International benchmark Brent crude was trading 0.5 percent up at $62.83 per barrel by 0545 GMT, having hit a low of $61.19 on Wednesday, its lowest since November 8. U.S. West Texas Intermediate was trading 0.4 percent higher at $57.56 a barrel, after falling as low as $56.17 on Wednesday, its lowest since November 7.

Gold prices surged as Asian equities declined after weaker-than-expected economic data out of China weighed on risk appetite. Spot gold was trading 0.1 percent up at $1,465.19 per ounce by 0548 GMT, having touched a low of $1,445.51 on Tuesday, its lowest August 5. U.S. gold futures rose 0.1 percentto $1,464.80 per ounce.

Treasuries Recap

The Australian 10-year government bond yield slumped to over 1-week low during Asian session after the country’s employment report for the month of October created a surprise disappointment among investors, as jobless rate rose and employment change slumped. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged over 9-1/2 basis points to 1.180 percent, the yield on the long-term 30-year bond slumped over 10 basis points to 1.782 percent and the yield on short-term 2-year plummeted nearly 7 basis points to 0.794 percent.

By Lactus Fernandes
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