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Asia Roundup: Yen at 1-month peak on U.S.-China tensions, Asian shares off 6-month high, investors eye EZ Markit PMI - Friday, July 24th, 2020

Market Roundup

  • Beijing ordered the U.S. to close its consulate in Chengdu
     
  • Oil eases on demand threats
     
  • Gold steadies on easing dollar, stimulus hopes
     

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Business Confidence(Jul)        
     
  • (0400 ET/0800 GMT) Italy Consumer Confidence(Jul)   
       
  • (0400 ET/0800 GMT) EZ Markit Manufacturing PMI(Jul) PREL       
     
  • (0400 ET/0800 GMT) EZ Markit Services PMI(Jul) PREL    
     
  • (0400 ET/0800 GMT) EZ Markit PMI Composite(Jul) PREL 
     

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index plunged to a near 2-year low on expectations a surge in coronavirus cases will make it difficult for the U.S. economy to outperform its peers. On Thursday, U.S. coronavirus cases topped 4 million, with over 2,600 new cases every hour on average, the highest rate in the world. The greenback against a basket of currencies traded 0.1 percent down at 94.70, having touched a low of 94.57 earlier, its lowest since September 2018.

EUR/USD: The euro rose, hovering towards a near 2-year peak hit in the prior session, following this week’s deal by European leaders on a 750 billion euro rescue fund to support economies hit hardest by the coronavirus. The European currency traded 0.2 percent higher at 1.1613, having touched a high of 1.1626 on Thursday, its highest since September 2018. Investors’ attention will remain on a series of data from Eurozone economies, EZ Markit manufacturing and service PMI, ahead of the U.S. new home sales and Markit manufacturing and service PMI. Immediate resistance is located at 1.1647, a break above targets 1.1681. On the downside, support is seen at 1.1550, a break below could drag it below 1.1511.

USD/JPY: The dollar slumped to a 1-month low as a rise in U.S. jobless claims last week, for the first time in four months and a persistent increase in COVID-19 cases put an apparent recovery in the labor market on stall speed and dampened consumer demand. The major was trading 0.5 percent down at 106.36, having hit a low of 106.35 earlier, its lowest since June 23. Investors’ will continue to track the broad-based market sentiment, ahead of  the U.S. new home sales and Markit manufacturing and service PMI. Immediate resistance is located at 107.06 (10-DMA), a break above targets 107.35. On the downside, support is seen at 106.22, a break below could take it near at 105.99.

GBP/USD: Sterling eased after rising to a 1-1/2 month peak earlier in the session as the European Union’s chief Brexit negotiator said that the UK had shown no willingness to break the deadlock on talks over a new trade agreement. The major traded 0.05 percent down at 1.2733, having hit a high of 1.2773 earlier, it’s highest since June 10. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2820, a break above could take it near 1.2849. On the downside, support is seen at 1.2686 (5-DMA), a break below targets 1.2829 (10-DMA). Against the euro, the pound was trading 0.2 percent down at 91.20 pence, having hit a high of 90.01 on Tuesday, it’s highest since July 13.

AUD/USD: The Australian dollar slumped, extending previous session losses, as Sino-U.S. tensions escalated after China ordered the United States to shut its Chengdu consulate in retaliation for the closure of its consulate in Texas. The Aussie trades 0.3 percent down at 0.7079, having hit a high of 0.7183 on Wednesday, it’s highest since late April 2019. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7146, a break above could take it near 0.7161. On the downside, support is seen at 0.7034, a break below targets 0.7005.

Equities Recap

Asian shares plunged from 6-month peaks as China-U.S. tensions soured after Beijing ordered the United States to close its consulate in Chengdu.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 1.7 percent.

Tokyo's Nikkei fell 0.6 percent to 22,751.61 points, Australia's S&P/ASX 200 index slumped 1.2 percent to 6,024.00 points. South Korea's KOSPI tumbled 0.7 percent to 2,200.44 points.

Shanghai composite index declined 3.4 percent to 3,196.77 points, while CSI 300 index traded 4.4 percent down at 4,505.59 points.

Hong Kong’s Hang Seng traded 2.6 percent lower at 24,617.42 points. Taiwan shares shed 0.8 percent to 12,304.04 points.

Commodities Recap

Crude oil prices eased on demand concerns stemming from rising corona virus cases and escalating U.S.-China tensions, although a weaker U.S. dollar limited downside. International benchmark Brent crude was trading 0.1 percent down at $43.28 per barrel by 0604 GMT, having hit a high of $44.86 on Tuesday, its highest since March 6. U.S. West Texas Intermediate was trading 0.2 percent lower at $40.97 a barrel, after rising as high as $42.49 on Tuesday, its highest since March 6.

Gold prices held firm near a 9-year high, supported by weaker dollar and unprecedented stimulus measures to revive corona virus-hit economies, while rise in U.S. jobless claims underpinned fears of a slow recovery. Spot gold was trading flat $1,887.90 per ounce by 0626 GMT, having hit a high of $1,898.37 earlier, its highest since September 2011. U.S. gold futures rose 1.4 percent to $1,891.10.

Treasuries Recap

The U.S. Treasury yields edged lower, with the benchmark 10-year note yield trading at 0.568 percent.

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