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Asia Roundup: Aussie eases as business confidence deteriorates, greenback at 3-week high as bets for aggressive Fed rate cut reduce, Asian shares slump - Tuesday, July 9th, 2019

Market Roundup

  • Markets shift focus to Fed's Powell 2-day testimony
     
  • Investors reprice chance of Fed cut after U.S. jobs data
     
  • Turkey's lira plunges after the dismissal of central bank governor

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Retail Sales s.a (May)
     
  • (0400 ET/0800 GMT) Italy Retail Sales n.s.a (May)
     
  • (0600 ET/1000 GMT) U.S. NFIB Business Optimism Index (June)
     

Key Events Ahead

  • No Significant Events Ahead

FX Beat

DXY: The dollar index was close to a 3-week peak, as investors await Fed chief Jerome Powell’s comments in two-day testimony to Congress beginning on Wednesday to determine how far the U.S. central bank will lower interest rates. The greenback against a basket of currencies traded 0.1 percent up at 97.44, having touched a high of 97.46 earlier, its highest since June 19.

EUR/USD: The euro steadied after falling to a near 2-1/2 week low in the previous session on greenback’s strength and weakness in the German industrial sector. The European currency traded flat at 1.1216, having touched a low of 1.1207 on Friday, its lowest since June 19.  Investors’ attention will remain on data out of the Eurozone economies, ahead of the U.S. JOLTS job opening and speeches by Fed officials. Immediate resistance is located at 1.1256 (23.6% retracement of 1.1412 and 1.1207), a break above targets 1.1310 (50.0% retracement). On the downside, support is seen at 1.1203 (June 17 Low), a break below could drag it below 1.1160 (June 3 Low).

USD/JPY: The dollar rallied to a 5-1/2 week peak as a stronger-than-expected increase in U.S. jobs in June tempered traders' expectations of a sharp Federal Reserve rate cut at the end of July. The robust job gain slashed expectations of a 50 basis point rate cut at the Fed's July 30-31 policy meeting, although other data showing the U.S. economy was losing steam indicated a quarter-point rate cut. The pair was trading 0.05 percent up at 108.76, having hit a high of 108.86 earlier, its highest since May 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. JOLTS job opening and speeches by Fed officials. Immediate resistance is located at 109.08, a break above targets 109.62 (May 31 High). On the downside, support is seen at 108.21 (June 12 Low), a break below could take it lower at 107.81 (June 5 Low).

GBP/USD: Sterling eased, extending losses for the third straight session on speculation the Bank of England will soon ease monetary policy in response to growing worries about the global economy and Britain’s exit from the European Union. The major is likely to remain on the downside after data released earlier showed, sales at British retailers rose at their slowest average pace on record over the past year as worries about Brexit dented consumer sentiment. The major traded eased to 1.2504, having hit a low of 1.2481 on Friday, it’s lowest since Jan. 3. Investors’ attention will remain on development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2564 (June 18 High), a break above could take it near 1.2613 (10-DMA). On the downside, support is seen at 1.2481 (July 5 Low), a break below targets 1.2445. Against the euro, the pound was trading 0.1 percent down at 89.65 pence, having hit a high of 89.19 last week, it’s highest since Jun. 25.

AUD/USD: The Australian dollar plunged to a near 2-week low after a survey showed domestic business confidence eased in June even as interest rates hit record lows. National Australia Bank’s index of business confidence fell 5 points to +2 in June, while in contrast, business conditions rose 2 points to +3, reversing a decline in May. The Aussie trades 0.3 percent down at 0.6953, having hit a low of 0.6951 earlier, it’s lowest since June 26. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6928 (June 24 Low), a break below targets 0.6901 (June 13 Low). On the upside, resistance is located at 0.6994 (June 26 High), a break above could take it near 0.7048 (May 7 High).

NZD/USD: The New Zealand dollar consolidated within narrow ranges, as investors refrained from taking big positions amid speculation that the Reserve Bank of New Zealand will cut interest rates again at its next meeting in August. The Kiwi trades flat at 0.6622, having touched a low of 0.6602 on Friday, its lowest level June 26. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6671 (10-DMA), a break above could take it near 0.6726 (July 1 High). On the downside, support is seen at 0.6592 (June 26 Low), a break below could drag it below 0.6554 (June 21 Low).

Equities Recap

Asian shares plunged to a 2-1/2 week low as investors scaled back Fed rate cut expectations following unexpectedly strong gains in U.S. jobs for June.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.5 percent, to its lowest since June 20.

Tokyo's Nikkei gained 0.2 percent to 21,565.15 points, Australia's S&P/ASX 200 index fell 0.1 percent to 6,665.70 points and South Korea's KOSPI tumbled 0.5 percent to 2,054.22 points.

Shanghai composite index eased 0.2 percent to 2,927.95 points, while CSI 300 index traded 0.3 percent down at 3,791.72 points.

Hong Kong’s Hang Seng traded 0.7 percent lower at 28,138.12 points. Taiwan shares shed 0.5 percent to 10,702.78 points.

Commodities Recap

Crude oil prices declined amid worries over the outlook for demand after the latest signs that international trade disputes have been weighing on the global economy, although the potential for conflicts in the Middle East limited downside. International benchmark Brent crude was trading 0.05 percent lower at $63.90 per barrel by 0516 GMT, having hit a low of $62.06 on Wednesday, its lowest since June 19. U.S. West Texas Intermediate was trading 0.1 percent down at $57.45 a barrel, after falling as low as $56.03 on Wednesday, its lowest since the June 20.

Gold prices eased as the greenback held near multi-week highs on reduced expectations of an aggressive U.S. rate cut. Spot gold was 0.05 percent down at $1,395.61 per ounce by 0518 GMT, having touched a high of $1,437.66 on Wednesday, its highest since June 25. U.S. gold futures were down 0.2 percent at $1,396.50 an ounce.

Treasuries Recap

The Japanese bond prices dropped for a second session, with the 10-year JGB futures easing -0.02 point to 153.75. The yields on 10-year cash bonds rose 0.5 basis point to -0.150 percent. The 20-year JGB yield dipped 0.5 basis point to 0.205 percent. The 30-year JGB yield dropped 1.5 basis points to 0.335 percent. The five-year JGB yield rose 1 basis point to -0.230 percent. At the short end of the curve, two-year JGB yield was flat at -0.205 percent.

The Australian government bonds remained flat during Asian trading session amid a muted trading day that witnessed data of little economic significance ahead of Federal Reserve Chair Jerome Powell’s scheduled testimony later this Thursday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, barely slipped to 1.325 percent, the yield on the long-term 30-year bond fell 2 basis points to 1.955 percent and the yield on short-term 2-year traded about 4 basis points higher at 0.976 percent.

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July 2 15:00 UTC Released

DKCurrency Reserves

Actual

449.6 Stale

Forecast

Previous

451.7 Stale

July 2 13:45 UTC Released

USISM NY Biz Conditions

Actual

50 %

Forecast

Previous

48.6 %

January 31 00:00 UTC 820317820317m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 820317820317m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 832137832137m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 820317820317m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 832137832137m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 820317820317m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 820317820317m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 820317820317m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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