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Asia Roundup: Aussie eases on worsening U.S.-China tensions, dollar rallies against yen as risk sentiment slightly improves on potential Japanese stimulus, Asian shares consolidate - Monday, May 25th, 2020

Posted at 25 May 2020 / Categories Market Roundups


Market Roundup

  • Oil falls on U.S.-China tensions
     
  • Gold down on potential Japanese stimulus
     

Economic Data Ahead

  • No Major Economic Releases

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index surged after a senior White House official said Beijing’s plan to impose a security law on the former British colony of Hong Kong could lead to U.S. sanctions. The greenback against a basket of currencies traded 0.2 percent up at 99.93, having touched a low of 99.00 on Wednesday, its lowest since May 4.

EUR/USD: The euro slumped to a 1-week low as the dollar surged after thousands rallied on Sunday to protest against Beijing’s plan to impose national security laws on Hong Kong.  The European currency traded 0.2 percent down at 1.0879, having touched a high of 1.1008 on Thursday, its highest since May 1. Immediate resistance is located at 1.0915, a break above targets 1.0987. On the downside, support is seen at 1.0867 (21-DMA), a break below could drag it below 1.0835.

USD/JPY: The dollar surged, as risk sentiment slightly improved on news that Japan is considering fresh stimulus worth over $929 billion, which mostly consists of financial aid programmes for companies hit by the coronavirus pandemic. The major was trading 0.1 percent up at 107.70, having hit a high of 108.08 on Tuesday, its highest since Apr. 13. Immediate resistance is located at 107.87, a break above targets 108.10. On the downside, support is seen at 107.43, a break below could take it near at 107.26.

GBP/USD: Sterling rose, halting a 4-day winning streak, as UK Prime Minister Boris Johnson backed his senior adviser Dominic Cummings on Sunday, despite calls from within his own Conservative Party for the aide to resign. Cummings came under pressure after reports he travelled to northern England from London during a nationwide lockdown in March when his wife was ill with COVID-19 symptoms.  The major traded 0.2 percent up at 1.2179, having hit a low of 1.2075 last week, it’s lowest since Mar. 26. Immediate resistance is located at 1.2218 (10-DMA), a break above could take it near 1.23239. On the downside, support is seen at 1.2130, a break below targets 1.2099. Against the euro, the pound was trading 0.2 percent up at 89.35 pence, having hit a low of 90.00 on Thursday, it’s lowest since March 27.

AUD/USD: The Australian dollar slumped, extending losses for the third straight session, as worries about a standoff between the United States and China over civil liberties in Hong Kong fuelled demand for safe-haven currencies. The Aussie trades 0.1 percent down at 0.6527, having hit a high of 0.6616 on Wednesday, it’s highest since March 9. Immediate resistance is located at 0.6584, a break above could take it near 0.6620. On the downside, support is seen at 0.6504 (10-DMA), a break below targets 0.6483 (21-DMA).

Equities Recap

Asian shares trimmed gains amid souring relations between China and the United States.

MSCI's broadest index of Asia-Pacific shares outside Japan consolidated within narrow ranges.

Tokyo's Nikkei surged 1.7 percent to 20,741.65 points, Australia's S&P/ASX 200 index rallied 2.2 percent to 5,615.60 points. South Korea's KOSPI gained 1.2 percent to 1,994.60 points.

Shanghai composite index rose 0.05 percent to 2,815.49 points, while CSI 300 index traded 0.1 percent up at 3,828.19 points.

Hong Kong’s Hang Seng traded 0.05 percent lower at 22,918.40 points. Taiwan shares added 0.6 percent to 10,871.18 points.

Commodities Recap

Crude oil prices declined on concerns over rising tensions between the United States and China over Beijing’s plans to impose security laws on Hong Kong and the possibility of sanctions from Washington. International benchmark Brent crude was trading 0.6 percent lower at $35.11 per barrel by 0544 GMT, having hit a high of $36.96 on Thursday, its highest since March 11. U.S. West Texas Intermediate was trading 0.5 percent down at $33.40 a barrel, after rising as high as $34.64 on Thursday, its highest since March 11.

Gold prices plunged as Japanese equities rose on news of a potential stimulus programme that boosted investors’ risk appetite, although fresh tensions over Hong Kong limited the downside. Spot gold was trading 0.4 percent down at $1,727.22 per ounce by 0559 GMT, having touched a low of $1,717.56 on Thursday, its lowest since May 14. U.S. gold futures were down 0.4 percent at $1,728.50.

Treasuries Recap

The Japanese government bond prices edged down, with benchmark 10-year JGB futures falling 0.10 point to 152.34. In the cash bond market, the 10-year JGB yield rose 1 basis point to minus 0.010 percent, while the 20-year JGB yield rose 2.5 basis points to 0.340 percent. The 30-year JGB yield rose 3 basis points to 0.475 percent.


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