Menu

Search

  |   Market Roundups

Menu

  |   Market Roundups

Search

Asia Roundup: Aussie slumps as RBA cuts rates to record low, Kiwi at 4-year trough as downbeat business confidence data stoke monetary easing expectations, Asian shares rally amid holiday-thinned trading - Tuesday, October 1st, 2019

Market Roundup

  •  Australia’s central bank cut interest rates for the third time this year
     
  • NZIER's Q3 Business Confidence dropped to the lowest since April 2009
     
  • Dollar index hits two-year high
     
  • Gold lingers near 2-month low
     
  • Oil prices recover after output from U.S., Russia, OPEC decline

Economic Data Ahead

  • (0315 ET/0715 GMT) Spain Manufacturing PMI
     
  • (0345 ET/0745 GMT) Italy Markit/IHS Mfg PMI
     
  • (0350 ET/0750 GMT) France Markit Mfg PMI
     
  • (0355 ET/0755 GMT) Germany Markit/BME Mfg PMI
     
  • (0400 ET/0800 GMT) Euro Zone  Markit Mfg Final PMI
     
  • (0430 ET/0830 GMT) United Kingdom Markit/CIPS Mfg PMI
     
  • (0500 ET/0900 GMT) EZ prelim consumer price index
     

Key Events Ahead

  • (0520 ET/0920 GMT) Reserve Bank of Australia governor Philip Lowe's speech

FX Beat

DXY: The dollar index rallied to an over 2-year peak as investors await the Institute for Supply Management’s measure of U.S. manufacturing activity, which is forecast to show a return to expansion in September that would ease concern about the impact of the trade war with China. The greenback against a basket of currencies traded 0.1 percent up at 99.54, having touched a high of 99.55 earlier, its highest since May 2017.

EUR/USD: The euro plunged to a near 2-1/2 year low as weak economic data from Germany reinforced expectations that monetary policy in the eurozone will remain accommodative for an extended period. Investors now await European consumer prices data, which is expected to rise an annual 1.0 percent in September, unchanged from the previous month and well below the European Central Bank’s target. The European currency traded down at 1.0891, having touched a low of 1.0884 the day before, its lowest since May 2017. Investors’ attention will remain on series of data from the Eurozone economies, EZ Markit PMI and consumer price index, ahead of the U.S. construction spending, Fed officials' speeches and manufacturing PMI from both Markit and ISM. Immediate resistance is located at 1.0938 (23.6% retracement of 1.1109 and 1.0884), a break above targets 1.0970 (38.2% retracement). On the downside, support is seen at 1.0865, a break below could drag it below 1.0830.

USD/JPY: The Japanese yen slumped to a near 2-week low after the Bank of Japan’s tankan showed business confidence in the third quarter declined to its lowest in six years. However, the upside in the pair appears limited amid growing uncertainties in the U.S.-China trade war. The major was trading 0.2 percent up at 108.24, having hit a high of 108.29 earlier, its highest since September 19. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. construction spending, manufacturing PMI from both Markit and ISM and Fed officials' speeches. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.95. On the downside, support is seen at 107.82 (10-DMA), a break below could take it near at 107.42 (September 26 Low).

GBP/USD: Sterling consolidated within narrow ranges, as investors remained cautious after Prime Minister Boris Johnson reiterated his pledge to deliver Brexit by October 31, with or without a deal, while Arlene Foster, the leader of Northern Ireland’s Democratic Unionist Party, an ally of Johnson’s Conservative Party, stated that she could not accept any deal that treated the province differently from the rest of the United Kingdom. The major traded flat at 1.2288, having hit a low of 1.2270 on Friday, it’s lowest since September 19. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2343 (5-DMA), a break above could take it near 1.2409 (10-DMA). On the downside, support is seen at 1.2233 (September 9 Low), a break below targets 1.2210 (September 5 Low). Against the euro, the pound was trading flat at 88.60 pence, having hit a low of 89.04 the day before, it’s lowest since Sept. 13.

AUD/USD: The Australian dollar tumbled to a 1-month low after the Reserve Bank of Australia cut interest rates in a bid to stimulate a sluggish economy and expressed concern about job growth. The RBA's quarter-point cut took the cash rate to an all-time low of just 0.75 percent and signaled it was prepared to do more if needed. Moreover, data showing domestic building approvals fell 1.1 percent in August, less than a sharp 10 percent slide in July but confounding expectations for a bounce of 2.5 percent further intensified the selling pressure around the major. The Aussie trades 0.6 percent down at 0.6707, having hit a low of 0.6705 earlier, it’s lowest since September 3. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6686, a break below targets 0.6659. On the upside, resistance is located at 0.6799 (August 21 High), a break above could take it near 0.6829 (September 5 High).

NZD/USD: The New Zealand dollar plunged to a 4-year low as weakening business confidence bolstered expectations for monetary easing. The third-quarter Business Confidence from the New Zealand Institute of Economic Research (NZIER) declined below prior -34 percent to the lowest since April 2009. The Kiwi trades 0.4 percent down at 0.6236, having touched a low of 0.6233 earlier, its lowest level since September 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data.  Immediate resistance is located at 0.6299 (September 23 High), a break above could take it near 0.6362 (September 18 High). On the downside, support is seen at 0.6221, a break below could drag it below 0.6205.

Equities Recap

Asian shares rallied amid hopes that the fourth quarter will bring progress in resolving the U.S.-China trade dispute.

MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.7 percent.

Tokyo's Nikkei rose 0.7 percent to 21,900.28 points, Australia's S&P/ASX 200 index surged 0.8 percent to 6,742.80 points.

South Korea's KOSPI rose 0.5 percent to 2,060.81 points and Taiwan shares added 1.3 percent to 10,967.65 points.

Chinese markets will be shut for a week.

Commodities Recap

Crude oil prices rebounded from a 3-1/2 week low hit in the previous session on reports that production at the world’s largest oil producers fell during the third quarter, although a resumption in Saudi supply and demand concerns limited upside. International benchmark Brent crude was trading 0.6 percent up at $59.67 per barrel by 0507 GMT, having hit a low of $59.17 the day before, its lowest since September 12. U.S. West Texas Intermediate was trading 0.6 percent higher at $54.55 a barrel, after falling as low as $53.95 on Monday, its lowest since September 13.

Gold prices slumped to a near 2-month low, as uncertainties arising from the U.S.-China trade war bolstered the greenback. Spot gold was trading 0.4 percent down at $1,465.96 per ounce by 0512 GMT, having touched a low of $1,482.57, its lowest since August 6. U.S. gold futures were up 0.3 percent at $1,476.8 per ounce.

Treasuries Recap

On Monday, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was just higher at 1.673 percent. The yield on the 30-year Treasury bond was up at 2.11 percent.

The Australian government bonds remained nearly flat during Asian session of the second trading day of the week after the Reserve Bank of Australia (RBA) slashed its benchmark cash rate by 25 basis points to 0.75 percent at its latest monetary policy meeting, held early today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 0.979 percent, the yield on the long-term 30-year bond also traded flat at 1.592 percent and the yield on short-term 2-year remained tad higher at 0.699 percent.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.