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Asia Roundup: Dollar consolidates against yen as tariff deadline looms, sterling eases on UK poll projections, investors’ eye Fed policy decision - Wednesday, December 11th, 2019

Market Roundup

  • Oil slips on surprise U.S. crude inventory build
     
  • Gold firms as trade deadline looms
     

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • No significant event scheduled

FX Beat

DXY: The dollar index consolidated as investors awaited developments from the United States central bank meeting. The Fed is widely expected to hold rates steady at the conclusion of today meeting but investors will scrutinize the monetary policy statement for further cues on the interest rate outlook. The greenback against a basket of currencies traded flat at 97.52, having touched a low of 97.36 on Friday, its lowest since November 4.

EUR/USD: The euro surged, extending gains for the third straight session after the ZEW research institute’s monthly index on economic morale among German investors showed the sentiment improved better than forecast in December. The European currency traded 0.05 percent up at 1.1095, having touched a low of 1.1039 on Friday, its lowest since December 2. Investors’ attention will remain on the U.S. consumer prices, monthly budget statement and Fed monetary policy decision, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1106, a break above targets 1.1140. On the downside, support is seen at 1.1072, a break below could drag it below 1.1047 (21-DMA).

USD/JPY: The dollar rose after a Wall Street Journal report stated that U.S. and Chinese officials were preparing for a delay to the December 15 round of tariffs. Investors now await the Federal Reserve policy meeting, where markets are almost certain the central bank will leave rates unchanged when its two-day meeting ends today. The major was trading 0.05 percent up at 108.79, having hit a low of 108.42 on Monday, its lowest since Nov 21. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer prices, monthly budget statement and Fed monetary policy decision. Immediate resistance is located at 108.99, a break above targets 109.20. On the downside, support is seen at 108.34, a break below could take it near at 108.18.

GBP/USD: Sterling eased after rising to an over 8-month peak in the previous session, as a poll showed a narrowing lead for Prime Minister Boris Johnson’s Conservative Party in an election later in the week. The major traded 0.1 percent down at 1.3141, having hit a high of 1.3215 on Tuesday, it’s highest since March 27. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3196, a break above could take it near 1.3246. On the downside, support is seen at 1.3100, a break below targets 1.3067. Against the euro, the pound was trading down at 84.37 pence, having hit a high of 83.92 on Monday, it’s highest since May 2017.

AUD/USD: The Australian dollar gained, halting a 2-day losing streak, as investors focused on what U.S. President Donald Trump will do with U.S. tariffs on nearly $160 billion worth of Chinese consumer goods, due to set in on Dec. 15. The Aussie trades 0.1 percent up at 0.6817, having hit a low of 0.6809 on Tuesday, it’s lowest since December 4. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6790, a break below targets 0.6761. On the upside, resistance is located at 0.6834, a break above could take it near 0.6862.

NZD/USD: The New Zealand dollar plunged to a 1-week low, as a Dec. 15 deadline for the next wave of U.S. tariffs on Chinese goods raised caution in global markets. The Kiwi trades 0.3 percent down at 0.6527, having touched a low of 0.6522 earlier, its lowest level since December 5. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6592, a break above could take it near 0.6619. On the downside, support is seen at 0.6500, a break below could drag it below 0.6456.

Equities Recap

Asian shares consolidated within narrow ranges as U.S.-China trade talks approached a weekend deadline with little sign of progress.

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

Tokyo's Nikkei eased 0.2 percent to 23,359.63 points, Australia's S&P/ASX 200 index gained 0.7 percent to 6,752.60 points and South Korea's KOSPI surged 0.3 percent to 2,103.42 points.

Shanghai composite index rose 0.3 percent to 2,924.56 points, while CSI 300 index traded 0.1 percent up at 3,904.07 points.

Hong Kong’s Hang Seng traded 0.4 percent higher at 26,531.42 points. Taiwan shares added 0.4 percent to 11,675.91 points.

Commodities Recap

Crude oil prices declined after industry data showed a surprise build in crude oil inventory in the United States, while investors waited for news on whether a fresh round of U.S. tariffs on Chinese goods would take effect on Sunday. International benchmark Brent crude was trading 0.1 percent down at $63.91 per barrel by 0416 GMT, having hit a high of $64.86 on Friday, its highest since September 23. U.S. West Texas Intermediate was trading 0.3 percent down at $58.91 a barrel, after rising as high as $59.81 on Friday, its highest since September 17.

Gold prices surged, extending gains for the third straight session amid uncertainty over U.S.-China trade talks ahead of a December 15 tariff deadline, while investors looked to the U.S. Federal Reserve's policy meeting for cues on its 2020 monetary outlook. Spot gold rose 0.05 percent to $1,463.28 an ounce at 0424 GMT, having touched a low of $1458.57 on Monday, its lowest since Dec. 2. U.S. gold futures gained 0.5 percent to $1,471.50.

Treasuries Recap

The yield on benchmark 10-year Treasury notes, which moves inversely to price, last stood a little higher at 1.8399 percent.

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