Market Roundup
- Australia government maintains RBA's 2-3% inflation target
- RBA keeps interest rates on hold at 0.75 percent
- Oil steadies on trade optimism
Economic Data Ahead
- (0500 ET/1000 GMT) EZ producer price index MoM September
- (0500 ET/1000 GMT) EZ producer price index YoY September
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index rose amid signs the United States and China are inching closer to a truce in their trade war and on optimism the U.S. economy is poised for solid, consumer-driven growth. The greenback against a basket of currencies traded up at 97.58, having touched a low of 97.11 on Friday, its lowest since August 9.
EUR/USD: The euro plunged to a near 1-week low after data released yesterday showed Eurozone's factory activity contracted sharply in October as demand was stifled by the U.S. trade war with China and the persistent lack of clarity over Britain’s departure from the European Union. The European currency traded 0.1 percent down at 1.1121, having touched a low of 1.1112 earlier, its lowest since October 30. Investors’ attention will remain on a Eurozone producer price index, ahead of the U.S. economic data, including trade balance, JOLTS Job Opening, service PMI by Markit and ISM. Immediate resistance is located at 1.1141 (5-DMA), a break above targets 1.1162. On the downside, support is seen at 1.1106, a break below could drag it below 1.1083 (21-DMA).
USD/JPY: The dollar rallied, extending gains for the third straight session, amid growing optimism the United States and China are on the verge of reaching a preliminary agreement. Investors also await the U.S. ISM non-manufacturing report due later, which is expected to show activity accelerated slightly in October. The major was trading 0.2 percent up at 108.80, having hit a high of 108.82 earlier, its highest since October 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, JOLTS Job Opening, service PMI by Markit and ISM. Immediate resistance is located at 109.03 (October 28 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.29 (October 21 Low), a break below could take it near at 108.03 (October 14 Low).
GBP/USD: Sterling consolidated within narrow ranges as investors attention focused on political developments as election campaigning gets underway. On Monday, the British currency tumbled on data showing UK construction PMI shrank for the sixth month in a row in October, reflecting a slowdown in growth due to political uncertainty. The major traded flat at 1.2880, having hit a high of 1.2975 on Thursday, it’s highest since October 22. Investors’ attention will remain on the development surrounding Brexit and UK service PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2949 (October 24 High), a break above could take it near 1.3000. On the downside, support is seen at 1.2806, a break below targets 1.2748. Against the euro, the pound was trading flat at 86.36 pence, having hit a high of 85.74 last month, it’s highest since May 8.
AUD/USD: The Australian dollar gained, reversing most of its previous session losses, after Reserve Bank of Australia left its cash rate at a record low of 0.75 percent and reiterated its concern about consumer spending. The Aussie trades 0.3 percent up at 0.6902, having hit a low of 0.6876 earlier, it’s lowest since October 30. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6864 (10-DMA), a break below targets 0.6838. On the upside, resistance is located at 0.6921, a break above could take it near 0.6950.
NZD/USD: The New Zealand dollar steadied after ANZ National Bank data showed its Commodity Price Index rose 1.2 percent in October, above expectations of 0.2 percent and previous 0.0 percent. The Kiwi trades 0.2 percent up at 0.6413, having touched a low of 0.6390 earlier, its lowest level since October 31. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6435 (October 22 High), a break above could take it near 0.6456 (November 1 High). On the downside, support is seen at 0.6370 (October 21 Low), a break below could drag it below 0.6300.
Equities Recap
Asian shares advanced to a 4-month peak after Beijing and Washington spoke of progress in trade talks.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.1 percent.
Tokyo's Nikkei gained 1.9 percent to 23,288.67 points, Australia's S&P/ASX 200 index rose 0.2 percent to 6,697.10 points and South Korea's KOSPI surged 0.5 percent to 2,139.97 points.
Shanghai composite index rose 0.8 percent to 2,999.48 points, while CSI 300 index traded 0.9 percent up at 4,012.61 points.
Hong Kong’s Hang Seng traded 0.6 percent higher at 27,706.73 points. Taiwan shares added 0.8 percent to 11,644.03 points.
Commodities Recap
Crude oil prices steadied after rising to a 1-1/2 month peak as investors kept an eye on U.S. inventory data due later. International benchmark Brent crude was trading flat at $62.11 per barrel by 0437 GMT, having hit a high of $62.76 on Monday, its highest since September 26. U.S. West Texas Intermediate was trading flat at $56.27 a barrel, after rising as high as $57.37 on Monday, its highest since September 24.
Gold prices declined, extending previous session losses, as hopes of a U.S.-China trade pact boosted the greenback and stoked appetite for riskier assets. Spot gold was trading 0.3 percent down at $1,505.56 per ounce by 0441 GMT, having hit a high of $1,516.05 on Friday, its highest since Oct. 25. U.S. gold futures inched down 0.2 percent to $1,507.70 per ounce.
Treasuries Recap
The Australian government bonds slumped during Asian session of the second trading day of the week tracking investors’ improved optimism over the U.S.-China trade deal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 5 basis points to 1.120 percent, the yield on the long-term 30-year bond surged nearly 5 basis points to 1.796 percent and the yield on short-term 2-year gained 3-1/2 basis points to 0.899 percent by 04:05GMT.
