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Asia Roundup: Aussie eases on downbeat retail sales, Yen rallies as fears mount over virus impact, Asian shares plunge - Friday, March 6th, 2020

Market Roundup

  • Oil slips amid demand concern
  • Gold set for biggest weekly gain since 2016
  • Australia’s Retail Sales drop 0.3% in Jan

Economic Data Ahead

  • (0245 ET/0745 GMT) France Exports, EUR (Jan)
  • (0245 ET/0745 GMT) France Current Account (Jan)
  • (0245 ET/0745 GMT) France Trade Balance EUR (Jan)
  • (0245 ET/0745 GMT) France Imports, EUR (Jan)

Key Events Ahead

  • No Significant Events Scheduled

Currencies Update

DXY: The dollar index declined to a 2-month low, as the U.S. Treasuries yield dropped 10 basis points to a record low of 0.825 percent, a drop of about 75 basis points in just 11 sessions. The greenback against a basket of currencies traded down at 96.57, having touched a low of 96.46 earlier, its lowest since Jan. 2.

EUR/USD: The euro rallied to a 7-month peak as investors awaited signs of likely action from the European Central Bank. An emergency ECB rate cut is seen as more complicated than in the United States because rates are already deeply negative. The European currency traded flat at 1.1237, having touched a high of 1.1248 earlier, its highest since Aug. 6. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the U.S. nonfarm payroll data, unemployment report and Fed official's speech. Immediate resistance is located at 1.1262, a break above targets 1.1282. On the downside, support is seen at 1.1205, a break below could drag it below 1.1171.

USD/JPY: The dollar plunged to an over 6-month low as mounting fears over the fallout from the coronavirus increased expectations for another U.S. rate cut. Investors wager the Federal Reserve will have to cut rates by 50 basis points for a second time this month. The major was trading 0.2 percent down at 105.91, having hit a low of 105.75 earlier, its lowest since August 28. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. nonfarm payroll data, unemployment report and Fed official's speech. Immediate resistance is located at 106.80 (38.2% retracement of 108.57 and 105.75), a break above targets 107.14 (50% retracement). On the downside, support is seen at 105.59, a break below could take it near at 105.26.

GBP/USD: Sterling rose, hovering towards a 1-week peak recorded in the prior session, as expectations waned for an immediate Bank of England rate cut. On Wednesday, incoming BoE governor Andrew Bailey told lawmakers the central bank should wait until it has more clarity about the economic hit from the coronavirus outbreak. The major traded 0.1 percent higher at 1.2945, having hit a high of 1.2968 on Thursday, it’s highest since Feb. 26. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2981, a break above could take it near 1.3017. On the downside, support is seen at 1.2923 (21-DMA), a break below targets 1.2887. Against the euro, the pound was trading 0.1 percent up at 86.63 pence, having hit a low of 87.44 on Wednesday, it’s lowest since Oct. 15.

AUD/USD: The Australian dollar eased, extending prior session losses, after domestic data showed January month retail sales slipped 0.3 percent, below 0.0 percent forecast. The Aussie trades down at 0.6610, having hit a low of 0.6433 last week, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6641 (21-DMA), a break above could take it near 0.6665. On the downside, support is seen at 0.6580 (10-DMA), a break below targets 0.6568.

Equities Recap

Asian shares slumped as disruptions to global business from the coronavirus beyond China worsened, stoking fears of a prolonged world economic slowdown.

MSCI's broadest index of Asia-Pacific shares outside Japan plunged 1.3 percent.

Tokyo's Nikkei declined 2.7 percent to 20,749.75 points, Australia's S&P/ASX 200 index slumped 2.8 percent to 6,216.20 points and South Korea's KOSPI tumbled 2.2 percent to 2,040.22 points.

Shanghai composite index fell 1.2 percent to 3,034.51 points, while CSI 300 index traded 1.6 percent down at 4,138.51 points.

Hong Kong’s Hang Seng traded 2.3 percent lower at 26,157.51 points. Taiwan shares shed 1.7 percent to 11,321.81 points

Commodities Recap

Crude oil plunged to a 1-week low amid worries about global oil demand and economic growth slowdown caused by the coronavirus outbreak. International benchmark Brent crude was trading 1.5 percent lower at $49.25 per barrel by 0542 GMT, having hit a low of $49.22 earlier, its lowest since Feb. 28. U.S. West Texas Intermediate was trading 1.5 percent down at $45.27 a barrel, after falling as low as $43.88 last week, its lowest since Dec. 2018.

Gold prices rallied and were on track to post their biggest weekly gain since February 2016 over fears that the global coronavirus outbreak could further weaken the world economy. Spot gold was trading 0.4 percent up at $1,679.09 per ounce by 0546 GMT, having touched a high of $1681.14 earlier, its highest since Feb. 24. U.S. gold futures edged higher by 0.2 percent to $1,671.00.

Treasuries Recap

The yields on 10-year U.S. Treasuries fell to a record low and 2-year yields fell to the lowest in more than 3 years as investors increased bets that the Federal Reserve will follow this week’s surprise 50 basis point rate cut with further easing.

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