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Asia Roundup: Aussie halts 2-day losing streak as business confidence improves, gold hits over 6-year peak amid ongoing geopolitical tensions, investors eye UK employment data - Tuesday, August 13th, 2019

Posted at 13 August 2019 / Categories Market Roundups


Market Roundup

  • Australia business conditions subdued in July
     
  • Gold hits over 6-year peak on risk-off sentiment
     
  • Oil prices slip on demand concerns
     
  • Euro eases amid Italy's political woes
     

Economic Data Ahead

  •  (0430 ET/0830 GMT) UK ILO unemployment rate 3M June
     
  • (0430 ET/0830 GMT) UK Claimant count change June
     
  • (0430 ET/0830 GMT) UK Claimant count rate June
     
  • (0430 ET/0830 GMT) UK Claimant average earnings including bonus 3Mo/Yr June
     
  • (0430 ET/0830 GMT) UK Claimant average earnings excluding bonus 3Mo/Yr June
     
  • (0500 ET/0900 GMT) German Zew Survey - Current Situation August
     
  • (0500 ET/0900 GMT) German Zew Survey - Economic Sentiment August
     
  • (0500 ET/0900 GMT) EZ Zew Survey - Economic Situation August
     

Key Events Ahead

  • No Significant Event Scheduled

FX Beat

DXY: The dollar index rose, extending previous session gains as investors await the U.S. Federal Reserve’s annual symposium at Jackson Hole, Wyoming, later this month, seeking clarity on the future path of interest rates.  The greenback against a basket of currencies traded 0.2 percent up at 97.55, having touched a low of 97.03 on Friday, its lowest since July 19.

EUR/USD: The euro declined, reversing most of its previous session gains, weighed down by political ructions in Italy. The European currency traded 0.2 percent down at 1.1192, having touched a high of 1.1249 last week, its highest since July 19. Investors’ attention will remain German ZEW Survey, ahead of the on the U.S. consumer price index. Immediate resistance is located at 1.1241 (August 7 High), a break above targets 1.1282 (July 19 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1138 (50% retracement).

USD/JPY: The dollar held near 7-month lows as concerns around protests in Hong Kong and an Argentine currency crash amid fears of global economic slowdown boosted the demand for the safe-haven Japanese yen. The major was trading 0.1 percent up at 105.36, having hit a low of 105.05 earlier, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index. Immediate resistance is located at 106.05 (23.6% retracement of 109.31 and 105.05), a break above targets 106.67 (38.2% retracement). On the downside, support is seen at 105.00, a break below could take it lower at 104.65 (Jan. 3 Low).

GBP/USD: Sterling eased, giving up some of its previous session gains, amid fears Britain would leave the European Union with no transition deal in place in October. On Monday, the British pound rebounded from multi-year lows amid expectations that the UK lawmakers may either postpone the Brexit or pave the way for a soft departure. The major traded 0.1 percent down at 1.2059, having hit a low of 1.2014 the day before, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2135 (23.6% retracement of 1.2522 and 1.2079), a break above could take it near 1.2210 (38.2% retracement). On the downside, support is seen at 1.1986 (Jan 16, 2017, Low, a break below targets 1.1904 (Oct 7, 2016, Low). Against the euro, the pound was trading flat at 93.12 pence, having hit a low of 93.24 earlier, it’s lowest since October 2009.

AUD/USD: The Australian dollar edged up, halting a 2-day losing streak after domestic data showed business confidence improved in July but conditions remained subdued and employment waned in a worrying sign for the economy. National Australia Bank’s index of business conditions declined 2 points to +2 in July, reversing a rise in June, while business confidence edged up to +4, but below the long-run average. The Aussie trades 0.1 percent up at 0.6759, having hit a low of 0.6677 last week, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6725 , a break below targets 0.6700. On the upside, resistance is located at 6831 (38.2% retracement of 0.7082 and 0.6677), a break above could take it near 0.6879 (50% retracement).

NZD/USD: The New Zealand dollar consolidated near multi-year lows as investors wagered the Reserve Bank of New Zealand will have to cut rates further, even though it surprised everyone last week. The Kiwi trades flat at 0.6437, having touched a low of 0.6376 on Wednesday, its lowest level Jan 2016. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6534 (38.2% retracement of 0.6790 and 0.6376), a break above could take it near 0.6583 (50% retracement). On the downside, support is seen at 0.6400, a break below could drag it below 0.6365.

Equities Recap

Asian shares slumped as fears about a drawn-out U.S.-China trade war, protests in Hong Kong and a crash in Argentina’s peso currency drove investors to safe assets.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8 percent.

Tokyo's Nikkei eased 1.1 percent to 20,455.44 points, Australia's S&P/ASX 200 index declined 0.3 percent to 6,568.50 points and South Korea's KOSPI dropped 0.9 percent to 1,925.83 points.

Shanghai composite index fell 0.7 percent to 2,794.56 points, while CSI 300 index traded 0.9 percent down at 3,662.86 points.

Hong Kong’s Hang Seng traded 1.9 percent lower at 25,331.59 points. Taiwan shares shed 1.05 percent to 10,362.66 points.

Commodities Recap

Crude oil prices declined, offsetting previous session gains, as sluggish demand forecasts countered expectations that major producers would prop up oil prices by limiting crude oil output. International benchmark Brent crude was trading 0.05 percent lower at $58.39 per barrel by 0547 GMT, having hit a low of $55.86 on Wednesday, its lowest since January. U.S. West Texas Intermediate was trading 0.1 percent up at $54.79 a barrel, after falling as low as $50.51 on Wednesday, its lowest since the January.

Gold prices rallied to their highest in more than six years, as concerns around protests in Hong Kong and an Argentine currency crash amid fears of global economic slowdown, prompted investors to take safety in safe -haven assets. Spot gold rose 0.5 percent to $1,519.33 per ounce by 0549 GMT, having touched a high of $1,519.75 earlier, its highest since April 2013. U.S. gold futures rose 0.6 percent to $1,526.90 an ounce.

Treasuries Recap

The Australian government bonds surged during Asian session of the second trading day of the week, tracking a similar movement in the United States Treasuries as investors shifted their interests towards safe-haven assets amid ongoing global economic and political worries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped nearly 3 basis points to 0.943 percent, the yield on the long-term 30-year bond plunged 5 basis points to 1.579 percent and the yield on short-term 2-year traded flat at 0.736 percent.


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