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Asia Roundup: Kiwi plunges as soft inflation raises chance of rate cut, Aussie at 2-month peak on robust China growth data, investors’ eye EZ and UK CPI figures - Wednesday, April 17th, 2019 

Market Roundup

  • China's Q1 growth unexpectedly steadies, but too early to call clear recovery
     
  • China's March property investment grows most in 8 months on looser policy
     
  • Japan exports hit by weak China demand, raising risk of economic contraction
     
  • U.S. raises trade deficit concerns with Japan, no deal on individual issues
     
  • New Zealand's slow Q1 inflation raises chance of rate cut, kiwi dlr tumbles
     
  • BOJ ready to deploy monetary policy tools to fight crisis - deputy governor
     
  • Economy, conservative Islam in spotlight as Indonesia goes to the polls
     
  • China Mar Industrial Output YY, 8.5%, 5.9% f'cast, 5.3% prev
     
  • China Mar Retail Sales YY, 8.7%, 8.4% f'cast, 8.2% prev
     

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Mar Consumer Prices Final YY, 1.0% f'cast, 1.0% prev
     
  • (0400 ET/0800 GMT) Italy Mar CPI (EU Norm) Final YY, 1.1% f'cast, 1.1% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar CPI YY, 2.0% f'cast, 1.9% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar Core CPI YY, 1.0% f'cast, 1.8% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar PPI Input Prices YY NSA, 3.9% f'cast, 3.7% prev
     
  • (0430 ET/0830 GMT) Great Britain Mar PPI Output Prices YY NSA, 2.1% f'cast, 2.2% prev
     
  • (0500ET/0900 GMT) EZ Mar HICP Final MM, 1.0% f'cast, 0.3% prev
     
  • (0500 ET/0900 GMT) EZ Mar HICP Final YY, 1.4% f'cast, 1.4% prev
     

Key Events Ahead

  • (1030 ET/1430 GMT) ECB's Sabine Lautenschlaeger takes part in a discussion at a conference organised by the Network for Greening the Financial System in Paris
     
  • (1230 ET/1630 GMT) St. Louis Fed's James Bullard gives presentation on the U.S. economy and monetary policy in Annandale-on-Hudson
     
  • (1230 ET/1630 GMT) Philadelphia Fed's Patrick Harker speaks on the economic outlook before a luncheon in Vineland, New Jersey
     
  • (1400 ET/1800 GMT) Fed issues Beige Book of economic condition
     
  • (1900 ET/2300 GMT) New York Fed's Lorie Logan speaks before the Money Marketeers of New York University
     

FX Beat

DXY: The dollar index tumbled as U.S. production at factories dropped at a 1.1 percent annualized rate in the first quarter, recording its first quarterly drop since the third quarter of 2017. The greenback against a basket of currencies traded 0.1 percent down at 96.93, having touched a low of 96.75 on Friday, its lowest since Mar. 27. FxWirePro's Hourly Dollar Strength Index stood at 2.06 (Neutral) by 0400 GMT.

EUR/USD: The euro rose after falling from a 3-week peak in the previous session on news several European Central Bank policymakers think the central bank’s economic growth projections are too optimistic, as economic weakness in China and trade tensions linger. The European currency traded 0.2 percent up at 1.1304, having touched a high of 1.1323 on Friday, its highest since Mar. 26. FxWirePro's Hourly Euro Strength Index stood at 136.39 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on a series of data from Eurozone economies, EZ current account figures, trade balance and consumer price index, ahead of the U.S. trade balance, wholesale inventories, and Fed Bullard's speech. Immediate resistance is located at 1.1331 (Mar. 25 High), a break above targets 1.1361 (Mar. 19 High). On the downside, support is seen at 1.1255 (Apr. 9 Low), a break below could drag it till 1.1213 (Mar. 28 Low).

USD/JPY: The dollar eased, extending previous session losses, as risk sentiment weakened after the United States raised concerns over its very large trade deficit with Japan in the first round of negotiations between the two nations on a new bilateral trade deal. The major was trading 0.1 percent down at 111.94, having hit a high of 112.09 on Monday, its highest since Mar. 5. FxWirePro's Hourly Yen Strength Index stood at -32.39 (Neutral) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, wholesale inventories, and Fed Bullard's speech. Immediate resistance is located at 112.60 (Dec. 20 High), a break above targets 113.24 (Dec. 5 High). On the downside, support is seen at 111.20 (Apr. 3 Low), a break below could take it lower at 110.53 (Mar. 20 Low).

GBP/USD: Sterling gained after falling to a 1-week low earlier in the session on news that Brexit talks between Prime Minister Theresa May's government and the opposition Labour Party were stalling. The major traded 0.1 percent up at 1.3058, having hit a low of 1.3031; it’s lowest since Apr. 9. FxWirePro's Hourly Sterling Strength Index stood at 2.35 (Neutral) 0400 GMT. Investors’ attention will remain on the UK retail price index, producer price index and consumer price index, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3121 (Apr. 5 High), a break above could take it near 1.3149 (Apr. 1 High). On the downside, support is seen at 1.3022 (Apr. 8 Low), a break below targets 1.3003 (Mar. 21 Low). Against the euro, the pound was trading 0.2 percent down at 86.56 pence, having hit a low of 86.61, it’s lowest since Mar. 22.

AUD/USD: The Australian dollar rallied to an 8-week peak after data showed China's economy grew at 6.4 percent in the March quarter, beating market's prediction of a slowdown to 6.3 percent. The bid tone was also supported by a separate report that showed China's industrial output grew at the fastest pace since July 2014 as factories ramped up output in anticipation of more business amid government support measures. The Aussie trades 0.3 percent up at 0.7191, having hit a high of 0.7205 earlier; it’s highest since Feb. 21. FxWirePro's Hourly Aussie Strength Index stood at 48.32 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7138 (10-DMA), a break below targets 0.7070 (Mar. 29 Low). On the upside, resistance is located at 0.7235 (Jan. 11 High), a break above could take it near 0.7284 (Feb. 1 High).

NZD/USD: The New Zealand dollar plunged to a 3-1/2 month low as domestic inflation slowed more than expected in the first quarter, which raised the chances of an interest rate cut in the coming months. The economy's consumer price index rose just 0.1 percent in the first three months of the year from the fourth quarter, below estimates of 0.3 percent by analysts and the 0.2 percent forecast by the Reserve Bank of New Zealand. The Kiwi trades 0.4 percent down at 0.6735, having touched a low of 0.6665, its lowest level Jan. 3. FxWirePro's Hourly Kiwi Strength Index was at -123.05 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6799 (Apr. 4 High), a break above could take it near 0.6827 (Mar. 5 High). On the downside, support is seen at 0.6652 (Jan. 2 Low), a break below could drag it below 0.6585 (Jan. 3 Low).

Equities Recap

Asian shares rallied after data showed steady Chinese economic growth in the first quarter, indicating policy stimulus was gaining traction in the world's second-largest economy.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent.

Tokyo's Nikkei rose 0.3 percent to 22,285.43 points, Australia's S&P/ASX 200 index eased 0.2 percent to 6,263.00 points and South Korea's KOSPI declined 0.1 percent to 2,246.57 points.

Shanghai composite index rose 0.4 percent to 3,265.12 points, while CSI 300 index traded 0.1 percent up at 4,089.65 points.

Hong Kong’s Hang Seng traded 0.05 percent lower at 30,129.56 points. Taiwan shares added 0.8 percent to 11,011.98 points

Commodities Recap

Crude oil prices surged to their highest since November on signs of strong demand from refineries in China, amid tightening supply as producers curtail output and as oil inventories in the United States fell unexpectedly. International benchmark Brent crude was trading 0.2 percent higher at $71.95 per barrel by 0406 GMT, having hit a high of $72.03, its highest since Nov. 8. U.S. West Texas Intermediate was trading 0.2 percent up at $64.45 a barrel, after rising as high as $64.77 last week, its highest since the Nov. 1.

Gold prices steadied after falling to a near 4-month trough in the previous session, as better-than-expected economic readings from China boosted Asian shares and sharpened risk appetite. Spot gold was trading flat at $1,276.98 per ounce by 0410 GMT, having touched a low of $1,272.86 on Tuesday, its lowest since Dec. 27. U.S. gold futures were up 0.1 percent to $1,278.80 an ounce.

Treasuries Recap

The Australian government bond futures were weaker, with the three-year bond contract down 2 ticks at 98.550, while the 10-year contract eased 3 ticks to 98.03.

The New Zealand government bonds yields were down about 6-7 basis points in the short-end of the curve.

The Canadian government bond prices were lower across the yield curve, with the two-year easing 4.5 Canadian cents to yield 1.631 percent and the 10-year down 23 Canadian cents to yield 1.783 percent.

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May 17 14:00 UTC Released

USU Mich 1Yr Inf Prelim

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