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Asia Roundup: Dollar steadies as expectations for deep U.S. interest rate cuts ease, gold gains on Middle East tensions, Asian shares plunge - Monday, July 22nd, 2019

Market Roundup

  • UK PM front-runner Boris Johnson says trade deal can break Brexit deadlock
     
  • Oil gains as Gulf tanker seizure raises tensions
     
  • Gold gains on Middle East tensions
     
  • South Korea's July 1-20 exports down 13.6% year-on-year
     

Economic Data Ahead

  • (0600 ET/1000 GMT) UK CBI Industrial Trends Survey - Orders MM July

Key Events Ahead

  • (0600 ET/1000 GMT) German Buba Monthly Report

FX Beat

DXY: The dollar index rallied as investors scaled back expectations of an aggressive interest rate cut by the Federal Reserve. On Friday, FOMC’s Bullard suggested a 25 bps rate cut should be appropriate, while Boston Federal Reserve President Eric Rosengren's said he does not see a scenario of lower rates. The greenback against a basket of currencies traded 0.1 percent up at 97.20, having touched a low of 96.67 on Thursday, its lowest since June 4.

EUR/USD: The euro eased, extending previous session losses, as investors expect the European Central Bank to either cut rates or keep settings accommodative at its monetary policy meeting on Thursday. The European currency traded 0.05 percent down at 1.1216, having touched a low of 1.1199 on Wednesday, its lowest since July 9. Investors’ attention will remain on the U.S. Chicago Fed National Activity Index, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1246 (23.6% retracement of 1.1412 and 1.1193), a break above targets 1.1278 (38.2% retracement). On the downside, support is seen at 1.1193 (July 9 Low), a break below could drag it below 1.1193 (July 9 Low).

USD/JPY: The dollar surged to a 5-day peak against the Japanese yen as investors tempered their expectations for deep U.S. interest rate cuts this month. However, the upside in the pair appears limited as the UK and Iran tension, and concerns over the U.S.-China trade negotiations supported safe-haven assets. The major was trading 0.3 percent up at 107.99, having hit a low of 107.21 on Thursday, its lowest since June 26. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Chicago Fed National Activity Index and Bank of Japan Governor Haruhiko Kuroda’s speech for clues on monetary policy. Immediate resistance is located at 108.32 (July 17 High), a break above targets 108.63 (July 5 High). On the downside, support is seen at 107.53 (July 3 Low), a break below could take it lower at 107.10 (June 26 Low).

GBP/USD: Sterling steadied after easing from a near 1-week peak in the previous session, supported by a vote by U.K. lawmakers last week that will make it harder for Britain’s next prime minister to try to force a no-deal Brexit. The major traded 0.1 percent up at 1.2505, having hit a high of 1.2558 on Thursday, it’s highest since July 15. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2574 (21-DMA), a break above could take it near 1.2648 (July 2 High). On the downside, support is seen at 1.2439 (July 9 Low), a break below targets 1.2396 (July 16 Low). Against the euro, the pound was trading 0.05 percent up 89.70 pence, having hit a high of 89.54 earlier, it’s highest since July 15.

AUD/USD: The Australian dollar consolidated within narrow ranges, as investors refrained from taking big positions amid growing concerns over the Reserve Bank of Australia’s next policy move. The Aussie trades flat at 0.7038, having hit a high of 0.7082 on Friday, it’s highest since Apr. 24. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7015 (July 4 Low), a break below targets 0.6985 (July 3 Low). On the upside, resistance is located at 0.7091 (Mar 12 High), a break above could take it near 0.7147 (Mar 26 High).

NZD/USD: The New Zealand dollar surged, hovering towards a 3-1/2 month high hit in the previous session, as investors' focus remains on China as Beijing and Washington seek to end a protracted trade war. The major trades 0.2 percent up at 0.6773, having touched a high of 0.6790 on Friday, its highest level Apr. 4. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6823 (Mar. 29 High), a break above could take it near 0.6858 (Mar. 15 High). On the downside, support is seen at 0.6723 (July 18 Low), a break below could drag it below 0.6664 (July 1 Low).

Equities Recap

Asian shares slumped as expectations for a larger cut were scaled back after the Wall Street Journal reported the Fed was likely to cut rates by 25 bps this month.

MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.4 percent.

Tokyo's Nikkei fell 0.3 percent to 21,405.61 points, Australia's S&P/ASX 200 index plunged 0.2 percent to 6,688.70 points and South Korea's KOSPI advanced 0.1 percent to 2,096.30 points.

Shanghai composite index eased 0.9 percent to 2,897.86 points, while CSI 300 index traded 0.3 percent declined at 3,795.53 points.

Hong Kong’s Hang Seng traded 0.9 percent lower at 28,518.44 points. Taiwan shares added 0.7 percent to 10,944.53 points.

Commodities Recap

Crude oil prices surged amid high tensions in the Middle East after a British tanker was seized by the Iranian military at the end of last week. International benchmark Brent crude was trading 0.7 percent higher at $63.23 per barrel by 0502 GMT, having hit a low of $61.26 on Thursday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.8 percent up at $56.17 a barrel, after falling as low as $54.71 on Thursday, its lowest since the June 20.

Gold prices rose after easing from a 6-year peak in the previous session as tensions in the Middle East and weaker financial markets supported the metal. Spot gold was trading 0.1 percent up at $1,427.17 per ounce by 0506 GMT, having touched a high of $1,452.80 on Friday, its highest since May, 2013. U.S. gold futures were up 0.1 percent at $1,428.50 an ounce.

Treasuries Recap

The Japanese government bond futures rose, with the 10-year JGB futures rising 0.03 point to 153.59. The 10-year JGB yield was flat at minus 0.140 percent. The two-year JGB yield was also unchanged, at minus 0.205 percent. The 30-year JGB yield rose 0.5 basis point to 0.375 percent, while the 40-year JGB yield rose 1 basis point to 0.415 percent.

The Australian government bonds jumped during Asian session of the first trading day of the week amid a muted trading session that witnessed data of little economic significance ahead of the Reserve Bank of Australia’s (RBA) Assistant Governor Christopher Kent’s speech, scheduled to be held today at 22:30GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 1.335 percent, the yield on the long-term 30-year bond also suffered 2-1/2 basis points to 1.978 percent and the yield on short-term 2-year traded nearly 1 basis point down at 0.954 percent.

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July 2 15:00 UTC Released

DKCurrency Reserves

Actual

449.6 Stale

Forecast

Previous

451.7 Stale

July 2 13:45 UTC Released

USISM NY Biz Conditions

Actual

50 %

Forecast

Previous

48.6 %

January 31 00:00 UTC 814068814068m

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2016 bln ARS

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January 31 00:00 UTC 814068814068m

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Forecast

2016 bln ARS

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January 22 19:00 UTC 825888825888m

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-1541 %

January 31 00:00 UTC 814068814068m

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Actual

Forecast

2016 bln ARS

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January 22 19:00 UTC 825888825888m

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-1541 %

January 31 00:00 UTC 814068814068m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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January 31 00:00 UTC 814068814068m

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Bln AR bln ARS

January 31 00:00 UTC 814068814068m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

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