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Asia Roundup: Aussie rallies on upbeat employment report, greenback eases as U.S. Treasury yields resume decline, Asian shares plunge - Thursday, July 18th, 2019

Market Roundup

  • Dollar eases as U.S. yields decline
     
  • Australia jobless rate stuck at 5.2 percent
     
  • Gold hits 2-week peak on Fed rate cut expectations
     

Economic Data Ahead

  • (0430 ET/0830 GMT) United Kingdom Retail Sales MM June
     
  • (0430 ET/0830 GMT) United Kingdom Retail Sales YY June
     
  • (0430 ET/0830 GMT) United Kingdom Retail Sales ex- fuel MM June
     
  • (0430 ET/0830 GMT) United Kingdom Retail Sales ex- fuel YY June
     
  • (0430 ET/0830 GMT) Bank of England Credit Conditions Survey Q2 Report
     

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index slumped after the International Monetary Fund said that the greenback was overvalued by 6 percent to 12 percent, based on near-term economic fundamentals.  The greenback against a basket of currencies traded 0.1 percent down at 97.08, having touched a low of 96.72 on Friday, its lowest since June 5.

EUR/USD: The euro surged, extending gains for the third straight session, as the greenback eased across the board. However, the upside appears limited amid expectations of easing from the European Central Bank as early as next week. The European currency traded 0.1 percent up at 1.1236, having touched a low of 1.1199 earlier, its lowest since July 9. Investors’ attention will remain on the U.S. unemployment benefit claims and Philadelphia Fed manufacturing survey, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1278 (38.2% retracement of 1.1412 and 1.1193), a break above targets 1.1304 (50.0% retracement). On the downside, support is seen at 1.1193 (July 9 Low), a break below could drag it below 1.1160 (June 3 Low).

USD/JPY: The dollar plunged to a 2-week low as the Treasury yields fell in the wake of weak U.S. housing market data and concerns about the prolonged U.S.-China trade dispute. The pair was trading 0.2 percent down at 107.71, having hit a low of 107.64 earlier, its lowest since July 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims and the Philadelphia Fed manufacturing survey. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.80 (July 8 High). On the downside, support is seen at 107.53 (July 3 Low), a break below could take it lower at 107.10 (June 26 Low).

GBP/USD: Sterling consolidated near 6-1/2 month lows hit in the previous session as investors refrained from taking big positions amid growing risks of Britain leaving the European Union in a no-deal Brexit. The major traded flat at 1.2436, having hit a low of 1.2382 on Wednesday, it’s lowest since Jan. 3. Investors’ attention will remain on the development surrounding Brexit, UK retail sales, producer price index, and consumer price index ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2488 (50.0% retracement of 1.2578 and 1.2396), a break above could take it near 1.2542 (78.6% retracement). On the downside, support is seen at 1.2373 (Jan. 3 Low), a break below targets 1.2334. Against the euro, the pound was trading 0.1 percent down at 90.35 pence, having hit a low of 90.51 on Wednesday, it’s lowest since Jan. 11.

AUD/USD: The Australian dollar rallied, halting a 2-day losing streak after data released earlier showed the country’s jobless rate remained stable at 5.2 percent for a third straight month and full-time employment surged in June, reducing the prospect of near-term easing by the Reserve Bank of Australia. The Aussie trades 0.3 percent up at 0.7033, having hit a high of 0.7044 on Tuesday, it’s highest since July 4. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6985 (July 3 Low), a break below targets 0.6941 (June 25 Low). On the upside, resistance is located at 0.7047 (July 4 High), a break above could take it near 0.7091 (Mar 12 High).

NZD/USD: The New Zealand dollar advanced to a 3-month peak as the greenback eased on weaker-than-expected U.S. housing data that increased expectations for an interest rate cut by the U.S. Federal Reserve. The Kiwi trades 0.2 percent up at 0.6744, having touched a high of 0.6746 earlier, its highest level Apr. 17. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6771 (Apr. 11 High), a break above could take it near 0.6799 (Apr. 4 High). On the downside, support is seen at 0.6664 (July 1 Low), a break below could drag it below 0.6602 (July 5 Low).

Equities Recap

Asian shares plunged as Wall Street stocks tumbled on early signs that the U.S.-China trade war could hurt corporate earnings.

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

Tokyo's Nikkei declined 2.2 percent to 21,005.53 points, Australia's S&P/ASX 200 index fell 0.5 percent to 6,642.50 points and South Korea's KOSPI tumbled 0.4 percent to 2,064.12 points.

Shanghai composite index eased 0.8 percent to 2,908.43 points, while CSI 300 index traded 0.7 percent down at 3,777.43 points.

Hong Kong’s Hang Seng traded 0.6 percent lower at 28,416.95 points. Taiwan shares shed 0.3 percent to 10,799.28 points.

Commodities Recap

Crude oil prices steadied after falling for three straight after data showed U.S. stockpiles of products like gasoline rose sharply last week, indicating weak demand during the peak driving season. . International benchmark Brent crude was trading 0.4 percent higher at $63.75 per barrel by 0446 GMT, having hit a low of $63.20 on Wednesday, its lowest since July 5. U.S. West Texas Intermediate was trading 0.3 percent up at $56.74 a barrel, after falling as low as $56.19 on Wednesday, its lowest since the July 3.

Gold prices eased from a two week peak hit earlier in the session, amid growing expectations for an interest rate cut by the U.S. Federal Reserve. Spot gold was trading 0.3 percent down at $1,422.11 per ounce by 0511 GMT, having touched a high of $1,430.02 earlier, its highest since July 3. U.S. gold futures rose 0.3 percent to $1,427.30 an ounce.

Treasuries Recap

The Japanese government bond prices gained, boosted by investor demand for safe-haven debt. The five-year JGB yield eased 1.5 basis points to minus 0.230 percent and the benchmark 10-year yield declined by 1 basis point to minus 0.140 percent. The 30-year yield was down 1 basis point at 0.360 percent.

The Australian government bonds jumped during Asian session tracking a similar movement in the U.S. Treasuries despite a tad higher growth in the country’s employment for the month of June, although unemployment rate remained unchanged. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 5-1/2 basis points to 1.346 percent, the yield on the long-term 30-year bond remained flat at 2.054 percent and the yield on short-term 2-year slipped 1 basis point to 0.950 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 820353820353m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 820353820353m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 832173832173m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 820353820353m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 832173832173m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 820353820353m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 820353820353m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 820353820353m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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