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Asia Roundup: Aussie plunges as downbeat employment data spurs rate cut expectation; dollar eases against yen as U.S. retail sales decline, Asian shares tumble - Thursday, May 16th, 2019

Market Roundup

  • Australia Apr Employment, 28.4k, 14.0k f'cast, 25.7k prev
     
  • Australia Apr Unemployment Rate, 5.2%, 5.1% f'cast, 5.0% prev, 5.1%   
     
  • Australia Apr Participation Rate, 65.8%, 65.7% f'cast, 65.7% prev
     
  • U.S. blacklists China's Huawei as trade dispute clouds global outlook
     
  • U.S. pulls staff from Iraq, says Iran gave 'blessing' for tanker attacks
     
  • Rebels hope to kill off May's Brexit deal in "last-chance" vote
     
  • Japan weighing downgrade of economic view, raises doubts on sales tax hike
     
  • BOJ deputy governor Wakatabe extols benefits of ultra-easy policy
     
  • Australia's Labor opposition set for election victory-poll
     
  • Lack of innovation is 'Achilles heel' for China's economy, Xi says
     
  • China's solid home price growth faces bubble, trade war risks
     

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • N/A Euro zone finance ministers' meeting in Brussels
     
  • N/A ECB President Mario Draghi participates in Eurogroup meeting in Brussels
     
  • (0300 ET/0700 GMT) EU Commission holds conference on the international role of the euro in Brussels
     
  • (0330 ET/0730 GMT) ECB Chief Economist Peter Praet moderates a session at a conference in Brussels
     
  • (0700 ET/1100 GMT) Riksbank Governor Stefan Ingves talks about developments in the payment market during ICMA's annual conference in Stockholm
     
  • (0715 ET/1115 GMT) BoE Deputy Governor Sam Woods speaks at an event in Switzerland held by Swiss bank UBS
     
  • (0830 ET/1230 GMT) ECB Vice President Luis de Guindos speaks at a conference in Brussels
     
  • (1100 ET/1500 GMT) BoC's Stephen Poloz and Carolyn Wilkins take media question after the release of the central bank's review of the Canadian financial system in Ottawa
     
  • (1215 ET/1605 GMT) Minneapolis Fed President Neel Kashkari speaks before the Santa Barbara County Economic Summit in Santa Barbara, California
     
  • (1330 ET/1730 GMT) BoE Monetary Policy Committee member, Jonathan Haskel, speaks at Ken Dixon Lecture at University of York in London
     
  • (1400 ET/1800 GMT) ECB's Benoit Coeure speaks at the 21st Geneva Conference on the World Economy in Geneva
     

FX Beat

DXY: The dollar index consolidated near a 1-week peak after a Federal Reserve policymaker stated that strong U.S. economic growth and subdued inflation meant there is no strong argument for a rate hike or cut right now. The greenback against a basket of currencies traded flat at 97.52, having touched a high of 97.70 on Wednesday, its highest since May 7. FxWirePro's Hourly Dollar Strength Index stood at 120.41 (Highly Bullish) by 0400 GMT.

EUR/USD: The euro rebounded from a near 1-week low recorded in the previous session, as trade concerns eased on expectations that U.S. President Donald Trump will delay implementing tariffs on imported cars. The European currency traded 0.1 percent up at 1.1208, having touched a high of 1.1263 on Monday, its highest since May 1. FxWirePro's Hourly Euro Strength Index stood at -59.31 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, and EZ trade balance, ahead of the U.S. building permits, housing starts, unemployment benefit claims, and Fed's Brainard's speech. Immediate resistance is located at 1.1262 (April 22 High), a break above targets 1.1304 (April 18 High). On the downside, support is seen at 1.1187 (May 1 Low) a break below could drag it till 1.1140 (April 24 Low).

USD/JPY: The dollar declined as an unexpected fall in the U.S. retail sales in April and a drop in industrial production last month indicated a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter. The major was trading 0.1 percent down at 109.50, having hit a low of 109.01 on Monday, its lowest since Feb. 1. FxWirePro's Hourly Yen Strength Index stood at 105.07 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. building permits, housing starts, unemployment benefit claims, and Fed's Brainard's speech. Immediate resistance is located at 110.04 (38.2% retracement of 111.68 and 109.01), a break above targets 110.67 (61.8% retracement). On the downside, support is seen at 109.01 (May 14 Low), a break below could take it lower at 108.49 (Jan. 31 Low).

GBP/USD: Sterling steadied after falling to a 3-month low in the prior session on growing expectations that Prime Minister Theresa May will again fail to get her Brexit deal approved and could soon face a leadership challenge. The major traded 0.1 percent up at 1.2815, having hit a low of 1.2826 on Wednesday; it’s lowest since Feb. 15. FxWirePro's Hourly Sterling Strength Index stood at -133.62 (Highly Bearish) 0500 GMT. Investors’ attention will remain on BoE Haskel's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2916 (Apr. 25 High), a break above could take it near 1.2963 (Apr. 24 High). On the downside, support is seen at 1.2772 (Feb. 14 Low), a break below targets 1.2709 (Jan. 11 Low). Against the euro, the pound was trading 0.05 percent down at 87.22 pence, having hit a low of 87.36 on Wednesday, it’s lowest since Feb. 19.

AUD/USD: The Australia dollar plunged to a 4-1/2 month low after data showed domestic unemployment rate rose to the highest in eight months while full-time jobs fell, cementing views that the Reserve Bank of Australia may be forced to lower rates soon to stimulate the economy. The Aussie trades 0.2 percent down at 0.6913, having hit a low of 0.6892, it’s lowest since Jan. 3. FxWirePro's Hourly Aussie Strength Index stood at -69.99 (Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6870, a break below targets 0.6845. On the upside, resistance is located at 0.6961 (Apr. 30 High), a break above could take it near 0.7002 (May 6 High).

NZD/USD: The New Zealand dollar slumped to a 1-week low, as markets imply around a two-in-three chance of a further easing by the Reserve Bank of New Zealand by year end. The Kiwi trades 0.2 percent down at 0.6549, having touched a low of 0.6548, its lowest level May 8. FxWirePro's Hourly Kiwi Strength Index was at -68.46 (Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6653 (May 3 High), a break above could take it near 0.6694 (Apr. 19 High). On the downside, support is seen at 0.6514 (Nov. 1 Low), a break below could drag it below 0.6474 (Oct. 4 Low).

Equities Recap

Asian shares slumped as U.S. sanctions on Chinese telecoms giant Huawei threaten fresh tensions with China.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.2 percent.

Tokyo's Nikkei fell 0.7 percent to 21,034.81 points, Australia's S&P/ASX 200 index gained 0.5 percent to 6,315.50 points and South Korea's KOSPI tumbled 1.1 percent to 2,070.30 points.

Shanghai composite index rose 0.4 percent to 2,951.60 points, while CSI 300 index traded 0.3 percent up at 3,737.41 points.

Hong Kong’s Hang Seng traded 0.1 percent higher at 28,294.27 points. Taiwan shares shed 0.8 percent to 10,474.61 points

Commodities Recap

Crude oil prices rose, extending gains for the third straight session, as tensions in the Middle East stoked fears of potential disruptions to supply. International benchmark Brent crude was trading 0.5 percent higher at $72.22 per barrel by 0434 GMT, having hit a high of $72.56 on Monday, its highest since Apr, 30. U.S. West Texas Intermediate was trading 0.5 percent up at $62.43 a barrel, after rising as high as $63.32 on Monday, its highest since the May 2.

Gold prices consolidated within narrow ranges, as a rise in equities offset support from doubts over trade talks between the United States and China. Spot gold was trading flat at $1,296.03 per ounce at 0435 GMT, having touched a high of $1,303.21 on Monday, its highest since Apr. 11. U.S. gold futures edged 0.1 percent lower to $1,296.90 an ounce.

Treasuries Recap

The 10-year U.S. Treasuries yield eased to 2.371 percent, near its 15-month low of 2.340 percent touched on March 28. The two-year notes yield stood at 2.1616 percent, having hit a 15-month low of 2.139 percent on Wednesday.

The Japanese government bond prices edged up across the board, with the 10-year JGB yield down half-a-basis point at minus 0.060 percent. The 20-year and 30-year yields both declined by a basis point to 0.350 percent and 0.520 percent, respectively.

The yields on Australian three-year bonds were already down at all-time lows of 1.204 percent having fallen 60 basis points so far this year. The three-year bond futures firmed 4 ticks to 98.810, while the 10-year contract added 3.5 ticks to 98.3300.

The New Zealand two-year bond yields were down at 1.398 percent, a long way from where they started the year at 1.715 percent.

The Canadian government bond prices were higher across a flatter yield curve. The two-year rose 4 Canadian cents to yield 1.583 percent and the 10-year climbed 28 Canadian cents to yield 1.663 percent. The 10-year yield touched its lowest intraday since April 1 at 1.633 percent.

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July 2 15:00 UTC Released

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