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Asia Roundup: Aussie slumps on RBA rate cut probability, greenback rallies on President Trump's speech, Asian shares consolidate - Wednesday, February 6th, 2019

Market Roundup

  • Trump vows to build border wall, warns Democrats against investigations
     
  • Trump plans to meet North Korea's Kim in Vietnam Feb. 27-28
     
  • Trump calls again on Congress to act on aging infrastructure needs
     
  • UK ministers hold secret talks of delaying Brexit by eight weeks -The Telegraph
     
  • U.S.' Mnuchin, Lighthizer to hold talks next week in China -sources
     
  • China says US report on its WTO compliance lacks factual basis
     
  • Australia c.bank chief puts rate cut back on table
     
  • Australia c.bank gov says scenarios on next rate move equally balanced
     

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Dec Industrial Orders MM, 0.3% f'cast, -1.0% prev

Key Events Ahead

  • (0300 ET/0800 GMT) Riksbank executive board meeting - Stockholm
     
  • (0850 ET/1350 GMT) Bank of Canada's Timothy Lane delivers speech on "Canadian Approach to Foreign Reserve Management” - Washington
     
  • (1805 ET/2305 GMT) Fed's Randal Quarles speaks at Council for Economic Education Vantage Point Reception - New York
     

FX Beat

DXY: The dollar index rallied to a near 2-week peak after U.S. President Donald Trump stated that any trade agreement with China must include structural change to end unfair trade practices, reduce the constant trade deficit, and defend American jobs. The greenback against a basket of currencies trades 0.1 percent up at 96.13, having touched a high of 96.15 earlier, its highest since January 25. FxWirePro's Hourly Dollar Strength Index stood at 87.50 (Slightly Bullish) by 0500 GMT.

EUR/USD: The euro slumped to an over 1-week low, as some European Central Bank policymakers were reluctant to alter their guidance on interest rates. The European currency traded 0.05 percent down at 1.1400, having touched a high of 1.1514 on Thursday, its highest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -22.97 (Neutral) by 0500 GMT. Investors’ attention will remain on German factory orders ahead of the U.S. trade balance data. Immediate resistance is located at 1.1474 (December 21 High), a break above targets 1.1540 (January 11 High). On the downside, support is seen at 1.1370 (Jan. 17 Low), a break below could drag it till 1.1353 (Jan. 18 Low).

USD/JPY: The dollar declined, halting a 3-day rally, after U.S. President Donald Trump, in his State of the Union speech, said that illegal immigration was an urgent national crisis and reiterated his vow to build a border wall. The major was trading 0.2 percent down at 109.75, having hit a high of 110.16 on Monday, its highest since December 31. FxWirePro's Hourly Yen Strength Index stood at 46.38 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance data. Immediate resistance is located at 110.47 (Dec. 31 High), a break above targets 111.19 (Dec. 24 High). On the downside, support is seen at 109.16 (Jan. 28 Low), a break below could take it lower at 108.80 (Jan. 30 Low).

GBP/USD: Sterling rebounded from a 2-week low touched in the previous session after a newspaper reported that UK cabinet ministers have secretly held talks on plans to delay Brexit by eight weeks.  The major traded 0.1 percent up at 1.2954, having hit a low of 1.2924 on Tuesday; it’s lowest since January 22. FxWirePro's Hourly Sterling Strength Index stood at -28.76 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3001 (January 17 High), a break above could take it near 1.3047 (November 13 High). On the downside, support is seen at 1.2924 (February 4 Low), a break below targets 1.2900. Against the euro, the pound was trading 0.1 percent up at 87.98 pence, having hit a low of 88.21 on Tuesday, it’s lowest since Jan. 22.

AUD/USD: The Australian dollar slumped to a 1-week low after Reserve Bank of Australia Governor chief Philip Lowe opened the door to a possible rate cut after more than a year of signalling tighter future policy. The Aussie trades 1.2 percent down at 0.7145, having hit a low of 0.7143 earlier; it’s lowest since January 29. FxWirePro's Hourly Aussie Strength Index stood at -175.45 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7115 (Jan. 22 Low), a break below targets 0.7076 (Jan. 25 Low). On the upside, resistance is located at 0.7272 (January 30 High), a break above could take it near 0.7327 (November 28 High).

Equities Recap

Asian shares consolidated within narrow ranges, amid holiday thinned-trading, while the Australian dollar slumped after the central bank opened the door to a possible rate cut.

MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.

Tokyo's Nikkei rose 0.1 percent to 20,874.06 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,026.10 points.

Commodities Recap

Crude oil prices declined, extending previous session losses, amid concerns over the outlook for the global economy.  International benchmark Brent crude was trading 0.05 percent down at $61.95 per barrel by 0525 GMT, having hit a high of $63.61 on Monday, its highest since December 7. U.S. West Texas Intermediate was trading 0.05 percent lower at $53.66 a barrel, after rising as high as $55.72 on Monday, its highest since the November 21.

Gold prices eased after U.S. President Donald Trump, in his State of the Union speech, vowed to build a border wall, however, provided little clarity over developments in the ongoing trade discussions with China. Spot gold was trading 0.1 percent down at $1,313 per ounce at 0528 GMT, having touched a low of $1,318.89 on Monday, its lowest level since Jan. 29. U.S. gold futures were also steady at $1,318 an ounce.

Treasuries Recap

The Australian government bonds gained sharply across the curve during Asian trading session after the Reserve Bank of Australia’s Governor Philip Lowe turned dovish in his speech at the National Press Club of Australia early today, pushing the 10-year yield to a 1-month low. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell about 7 basis points to 2.18 percent (lowest since Jan 4), the yield on the long-term 30-year bond also dipped 6 basis points to 2.72 percent and the yield on short-term 2-year slumped over 8 basis points to 1.78 percent.

The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 0.9 Canadian cents to yield 1.833 percent and the 10-year climbed 16 Canadian cents to yield 1.944 percent.

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March 19 07:00 UTC Released

CHTrade

Actual

3125 Mln CH

Forecast

Previous

3043 Mln CH

March 19 00:30 UTC Released

AUHome Price Index*

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-2.4 %

Forecast

-2 %

Previous

-1.5 %

January 31 00:00 UTC 594540594540m

ARAnnual Primary Balance*

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2016 bln ARS

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January 31 00:00 UTC 594540594540m

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2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 606360606360m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 594540594540m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 606360606360m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 594540594540m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 594540594540m

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 594540594540m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

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