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Asia Roundup: Aussie gains on upbeat job advertisements, greenback rallies as expectations for aggressive Fed rate cuts fade, Asian shares plunge - Monday, July 8th, 2019

Market Roundup

  • Strong U.S. payrolls temper Fed rate cut expectations
     
  • Turkish lira near 2-week lows on c.bank independence worries
     
  • Data, not markets will decide next ECB steps: Villeroy
     
  • BOJ's Kuroda says moderate economic expansion to continue
     
  • Japan machinery orders fall most in 8 months in worrying sign for economy
     

Economic Data Ahead

  • (0430 ET/0830 GMT)  Eurozone Sentix investor confidence (July)

Key Events Ahead

  • No Significant Events Ahead

FX Beat

DXY: The dollar index rallied as the U.S. Treasury yields rose across the board after a bigger-than-expected increase in U.S. non-farm payrolls tempered expectations for a Fed rate cut. The greenback against a basket of currencies traded 0.1 percent up at 96.82, having touched a high of 96.88 on Tuesday, its highest since June 20.

EUR/USD: The euro consolidated near a 2-1/2 week low hit in the previous session, after the European Central Bank policymaker Francois Villeroy de Galhau stated that the ECB will decide its next policy moves based on incoming economic data and not financial market swings. On Friday, data showed that German industrial orders fell far more than expected in May, followed by a warning from the economy ministry that this sector was likely to remain weak in the short term. The European currency traded flat at 1.1227, having touched a low of 1.1207 on Friday, its lowest since June 19.  Investors’ attention will remain on the Eurozone Sentix investor confidence data, ahead of the U.S. consumer credit change report. 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 declined after rising to a near 3-week peak in the previous session on better-than-expected U.S. June jobs data that suggested the Federal Reserve will not aggressively cut interest rates later this month. The U.S. nonfarm payrolls rebounded in June to 224,000, the most in five months, surpassing consensus estimate of 160,000. The pair was trading 0.1 percent down at 108.30, having hit a high of 107.63 on Friday, its highest since Jun. 18. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer credit change report. Immediate resistance is located at 108.80 (June 11 High), a break above targets 109.08. On the downside, support is seen at 107.81 (June 5 Low), a break below could take it lower at 107.24 (June 24 Low).

GBP/USD: Sterling traded near a 6-month low as weak economic data and a rise in expectations that the Bank of England will cut interest rates dented British pound bull's sentiments. Investors eye UK BRC Like-For-Like Retail Sales (YoY), which is expected to increase +0.8 percent from -3.0 percent decline in June. The major traded flat at 1.2528, 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 1.2579 (5-DMA), a break above could take it near 1.2636 (10-DMA). On the downside, support is seen at 1.2506 (June 18 Low), a break below targets 1.2481 (July 5 Low). Against the euro, the pound was trading flat at 89.57 pence, having hit a high of 89.19 last week, it’s highest since Jun. 25.

AUD/USD: The Australian dollar surged after domestic data showed job advertisements in newspapers and on the internet rebounded in June after a sharp decline in May. The economy's total job advertisements added a seasonally adjusted 4.6 percent in June from May, when they fell 8.4 percent for the biggest fall since January 2010. The Aussie trades 0.1 percent up at 0.6983, having hit a high of 0.7047 on Thursday, it’s highest since May 7.  Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6941 (June 25 Low), a break below targets 0.6901 (June 13 Low). On the upside, resistance is located at 0.7048 (May 7 High), a break above could take it near 0.7076 (Mar. 11 High).

NZD/USD: The New Zealand dollar steadied after falling to a 1-1/2 week low in the previous session, as the Reserve Bank of New Zealand skipped a chance for further easing in June. However, investors expect it will cut again at its next meeting in August and will reach 1 percent by early next year. The Kiwi trades 0.2 percent up at 0.6639, 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 (5-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 as strong U.S. jobs data for June dampened expectations for aggressive interest rate cuts by the Federal Reserve.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped over 1 percent.

Tokyo's Nikkei declined 0.9 percent to 21,534.35 points, Australia's S&P/ASX 200 index fell 1.2 percent to 6,672.20 points and South Korea's KOSPI tumbled 2.1 percent to 2,066.30 points.

Shanghai composite index eased 2.4 percent to 2,940.00 points, while CSI 300 index traded 2.1 percent down at 3,811.96 points.

Hong Kong’s Hang Seng traded 1.8 percent lower at 28,258.28 points. Taiwan shares shed 0.3 percent to 10,751.22 points.

Commodities Recap

Crude prices declined, weighed down by geopolitical risks against the impact of the U.S.-China trade war on the global economy. International benchmark Brent crude was trading 0.4 percent lower at $64.19 per barrel by 0535 GMT, having hit a low of $62.06 on Wednesday, its lowest since June 19. U.S. West Texas Intermediate was trading 0.5 percent down at $57.45 a barrel, after falling as low as $56.03 on Wednesday, its lowest since the June 20.

Gold prices steadied after declining in the previous session on strong U.S. jobs report that tempered expectations of an aggressive interest rate cut by the Federal Reserve later this month. Spot gold was trading 0.4 percent up at $1,404.92 per ounce by 0539 GMT, having touched a high of $1,437.66 on Wednesday, its highest since June 25. U.S. gold futures were down 0.1 percent at $1,399.40 an ounce.

Treasuries Recap

The Japanese government bond prices declined, with the 1en-year JGB futures easing -0.16 point to 153.80. The 10-year JGB yield rose 1.5 basis points to minus 0.155 percent. The 20-year JGB yield rose 1 basis point to 0.205 percent, while the 30-year JGB yield rose 1.5 basis points to 0.345 percent. At the short end of the curve yields on two-year JGBs rose 1 basis point to -0.205 percent.

The Australian government bonds plunged during early Asian trading session tracking sell-off in the U.S. Treasuries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose nearly 4 basis points to 1.325 percent, the yield on the long-term 30-year bond also climbed 4 basis points to 1.972 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 823476823476m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 823476823476m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 835296835296m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 823476823476m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 835296835296m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 823476823476m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 823476823476m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 823476823476m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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