Market Roundup
- Oil gains U.S. crude inventories decline
- Markets assess U.S.-China deal
- Brexit extension ultimately up to Britain - EU's von der Leyen
Economic Data Ahead
- (0200 ET/0700 GMT) German consumer price index YoY
- (0200 ET/0700 GMT) German consumer price index MoM
Key Events Ahead
- (0730 ET/1230 GMT) ECB monetary policy meeting accounts
FX Beat
DXY: The dollar index steadied near a 1-week low as investors’ eye the timeline for reducing tariffs and the development of U.S.-China Phase 2 trade negotiations. The greenback against a basket of currencies traded flat at 97.21, having touched a low of 97.16 on Wednesday, its lowest since Jan. 8.
EUR/USD: The euro rallied, extending previous session gains, as investors grew cautiously optimistic about the economy's outlook following the signing of a U.S.-China trade deal. The European currency traded 0.05 percent up at 1.1152, having touched a high of 1.1163 on Wednesday, its highest since January 8. Investors’ attention will remain on German consumer price index, and ECB monetary policy meeting accounts, ahead of the U.S. unemployment benefit claims, retail sales, import and export price index and Fed Bowman's speech. Immediate resistance is located at 1.1174, a break above targets 1.1197. On the downside, support is seen at 1.1127 (5-DMA), a break below could drag it below 1.1102.
USD/JPY: The dollar surged as risk sentiment improved after U.S. Vice President Mike Pence said further Phase 2 discussions had already begun as negotiators work to resolve differences. The major was trading 0.05 percent up at 109.92, having hit a high of 110.21 on Tuesday, its highest since May 23. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, retail sales, import and export price index and Fed Bowman's speech. Immediate resistance is located at 110.31, a break above targets 110.62. On the downside, support is seen at 109.59, a break below could take it near at 109.24 (21-DMA).
GBP/USD: Sterling rallied to a near 1-week peak after the head of the European Commission stated that it will ultimately be up to Britain whether or not it seeks more time to negotiate a trade agreement with the European Union after it leaves the bloc. The major traded 0.1 percent up at 1.3050, having hit a low of 1.2954 on Tuesday, it’s lowest since Dec. 24. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3097, a break above could take it near 1.3169. On the downside, support is seen at 1.3012, a break below targets 1.2952. Against the euro, the pound was trading flat at 85.46 pence, having hit a low of 85.95 on Tuesday, it’s lowest since Nov. 22.
AUD/USD: The Australian dollar rallied to an over 1-week high after China pledged to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years, while the United States will cut by half the tariff rate it imposed on Sept. 1 on a $120 billion list of Chinese goods, to 7.5 percent. The Aussie trades 0.1 percent up at 0.6906, having hit a high of 0.6919 earlier, it’s highest since Jan. 7. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6868, a break below targets 0.6838. On the upside, resistance is located at 0.6936, a break above could take it near 0.6957.
NZD/USD: The New Zealand dollar rebounded from a near 4-week low recorded in the previous session, as investors hoped the U.S.-China trade deal could ease tensions between both the economies and help to revive global growth. The Kiwi trades 0.3 percent up at 0.6634, having touched a low of 0.6583 on Wednesday, its lowest level since Dec. 19. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6658, a break above could take it near 0.6701. On the downside, support is seen at 0.6587, a break below could drag it below 0.6554.
Equities Recap
Asian shares advanced after the United States and China signed an initial deal to defuse their 18-month trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.
Tokyo's Nikkei rallied 0.05 percent to 23,922.87 points, Australia's S&P/ASX 200 index surged 0.7 percent to 7,041.80 points and South Korea's KOSPI gained 0.2 percent to 2,236.40 points.
Shanghai composite index eased 0.3 percent to 3,082.03 points, while CSI 300 index traded 0.3 percent down at 4,155.36 points.
Hong Kong’s Hang Seng traded 0.05 percent higher at 28,793.04 points. Taiwan shares shed 0.3 percent to 12,060.31 points.
Commodities Recap
Crude oil prices surged after the signing of an initial U.S.-China trade deal, while U.S. crude inventories fell more than expected. International benchmark Brent crude was trading 0.1 percent higher at $64.38 per barrel by 0413 GMT, having hit a low of $63.54 on Wednesday, its lowest since Dec. 11. U.S. West Texas Intermediate was trading 0.2 percent up at $58.18 a barrel, after falling as low as $57.40 on Wednesday, its lowest since Dec. 4.
Gold prices consolidated within narrow ranges following the signing of an initial trade deal between the U.S.-China. Spot gold trades flat $1,556.23 per ounce by 0423 GMT, having touched a low of $1536.01 on Tuesday, its lowest since Jan. 3. U.S. gold futures rose 0.2 percent to $1,556.40.
Treasuries Recap
The Australian bonds gained during Asian session, tracking a similar movement in the U.S. Treasuries as investors shrugged-off the signing of Phase 1 trade deal between China and the United States, trying to read beyond the lines. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 1.181 percent, the yield on the long-term 30-year bond plunged nearly 3-1/2 basis points to 1.790 percent and the yield on short-term 2-year lost nearly 2 basis points to 0.784 percent by 04:25GMT.
