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Asia Roundup: Aussie rises as consumer sentiment improves, greenback hold gains amid renewed concerns over coronavirus vaccine, Asian shares plunge - Wednesday, October 14th, 2020

Market Roundup

  • Oil prices slips on demand concerns
     
  • Gold declines as dollar holds firm
     
  • Australia Consumer Sentiment Jumps 11.9 percent
     

Economic Data Ahead

  • (0500 ET/0900 GMT) EZ Industrial Production w.d.a. (YoY)(Aug)
     
  • (0500 ET/0900 GMT) EZ Industrial Production s.a. (MoM)(Aug)
     

Key Events Ahead

  • (0400 ET/0800 GMT) ECB's President Lagarde speech
     
  • (0700 ET/1100 GMT) ECB's Mersch speech       
        
  • (0800 ET/1200 GMT) ECB's Lane speech
     

FX Beat

DXY: The dollar index gained amid renewed questions about a coronavirus vaccine. Johnson & Johnson said it is pausing a clinical trial of a coronavirus vaccine and Eli Lilly and Co also said it paused a coronavirus antibody treatment. The greenback against a basket of currencies traded 0.05 percent up at 93.56, having touched a low of 93.01 on Monday, its lowest since September 21.

EUR/USD: The euro steadied after tumbling to a 1-week low in the prior session after sources involved in a revamp of European Central Bank policy told Reuters that there is reluctance among ECB policymakers to follow the U.S. Federal Reserve’s move to target an average inflation rate. The European currency traded flat at 1.1745, having touched a low of 1.1730 on Tuesday, its lowest since October 7. Investors’ attention will remain on series of economic data from the Eurozone economies, EZ industrial production and ECB officials speeches, ahead of the U.S. producer price index and monthly budget statement. Immediate resistance is located at 1.1770, a break above targets 1.1797. On the downside, support is seen at 1.1720, a break below could drag it below 1.1701.

USD/JPY: The dollar declined, reversing some of its previous session gains, as hopes for the passage of a new coronavirus relief package faded after U.S. House Speaker Nancy Pelosi rejected a $1.8 trillion relief proposal from the White House, stating that it falls significantly short of what this pandemic and deep recession demand. The major was trading 0.05 percent down at 105.43, having hit a low of 105.24 on Monday, its lowest since October 5. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index and monthly budget statement. Immediate resistance is located at 105.67 (5-DMA), a break above targets 105.92. On the downside, support is seen at 105.09, a break below could take it near at 104.84.           

GBP/USD: Sterling fell to a near 1-week low after recent reports showed that the European Union wants more concessions from Britain before entering a last phase of negotiations. British Prime Minister Boris Johnson had set a deadline of the October 15 EU summit for agreeing a trade deal and David Frost is in Brussels for intensified talks. The major traded 0.2 percent lower at 1.2907, having hit a low of 1.2906 earlier, it’s lowest since October 8. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2976 (5-DMA), a break above could take it near 1.3007. On the downside, support is seen at 1.2886 (21-DMA), a break below targets 1.2858. Against the euro, the pound was trading 0.3 percent down at 90.98 pence, having hit a low of 91.00 earlier in the session, it’s lowest since October 9.

AUD/USD: The Australian dollar rallied, halting a 2-day losing streak, after a measure of the country's consumer sentiment soared in October to the highest since July 2018 in a sign of confidence in the country’s fiscal and monetary authorities for their handling of the coronavirus pandemic. The Westpac-Melbourne Institute Index of Consumer Sentiment jumped 11.9 percent in October from September. The Aussie trades 0.1 percent up at 0.7167, having hit a high of 0.7243 on Friday, it’s highest since September 21. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7208, a break above could take it near 0.7234. On the downside, support is seen at 0.7130, a break below targets 0.7111.

NZD/USD: The New Zealand dollar rose after Reserve Bank of New Zealand Assistant Governor Christian Hawkesby said that some economic data have surprised to the upside. He further added that there was still a lot of uncertainty about the outlook, meaning monetary policy will stay stimulatory for a long time to come. The Kiwi traded 0.2 percent higher at 0.6654, having touched a high of 0.6673 on Friday, its highest level since September 22. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6690, a break above could take it near 0.6720. On the downside, support is seen at 0.6622 (5-DMA), a break below could drag it below 0.6587.

Equities Recap

Asian shares slumped as halted COVID-19 vaccine trials and an impasse in U.S. fiscal aid package talks dent investor risk appetite.

MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.2 percent.

Tokyo's Nikkei rose 0.1 percent to 23,626.73 points, Australia's S&P/ASX 200 index rallied 0.3 percent to 6,179.20 points. South Korea's KOSPI fell 0.9 percent to 2,381.08 points.

Shanghai composite index eased 0.6 percent to 3,339.53 points, while CSI 300 index traded 0.7 percent down at 4,807.64 points.

Hong Kong’s Hang Seng traded 0.05 percent higher at 24,640.24 points. Taiwan shares shed 0.2 percent to 12,919.31 points.

Commodities Recap

Crude oil prices declined on concerns that fuel demand will continue to falter as rising coronavirus cases across Europe and in the United States could impede economic growth. International benchmark Brent crude was trading 0.3 percent down at $42.28 per barrel by 0518 GMT, having hit a high of $43.54 on Friday, its highest since September 18. U.S. West Texas Intermediate was trading 0.4 percent lower at $40.02 a barrel, after rising as high as $41.44 on Friday, its highest since September 18.

Gold prices steadied after tumbling to a near 1-week low earlier in the session as lack of an agreement on additional U.S. fiscal stimulus helped the dollar stay firm. Spot gold was trading 0.2 percent higher at $1,895.21 per ounce by 0529 GMT, having hit a low of $1822.43 earlier, its lowest since October 8. U.S. gold futures were trading 0.2 percent up at $1,898.10.

Treasuries Recap

The U.S. Treasury yields steadied, with the benchmark 10-year note yield trading at 0.732 percent and the 30-year yield at 1.516 percent.

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