Posted at 10 October 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
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FX Beat
DXY: The dollar index eased after rising for three straight sessions, as minutes of the central bank’s last policy meeting showed most Federal Reserve policymakers supported the need for an interest rate cut in September, but they remain increasingly divided on the path ahead for monetary policy. The greenback against a basket of currencies traded 0.2 percent down at 98.97, having touched a low of 99.25 on Tuesday, its highest since October 2.
EUR/USD: The euro rose, extending previous session gains, after the European Central Bank’s vice-president on Wednesday raised the criteria on further interest rate cuts, stating the side effects of the ECB’s easy money policy were becoming more tangible. The European currency traded 0.1 percent up at 1.0993, having touched a high of 1.0999 last week, its highest since September 25. Investors’ attention will remain on a series of data out from the Eurozone economies and ECB monetary policy meeting accounts, ahead of the U.S. unemployment benefit claims, consumer price index, Fed official's speeches. Immediate resistance is located at 1.1019 (61.8% retracement of 1.1109 and 1.0879), a break above targets 1.1059 (78.6% retracement). On the downside, support is seen at 1.0948 (10-DMA), a break below could drag it below 1.0904.
USD/JPY: The dollar rallied to a 1-week peak earlier in the session on revived hopes for an amicable resolution to the U.S.-Chinese trade war, after a report that China is still open to agreeing to a partial trade deal with the United States. However, the pair trimmed gains on news that the United States and China made no progress in deputy-level trade talks in Washington. The major was trading flat at 107.03, having hit a high of 107.77 earlier, its highest since October 2. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, consumer price index, Fed official's speeches. Immediate resistance is located at 107.88 (September 25 High), a break above targets 108.25 (September 13 High). On the downside, support is seen at 107.08 (October 9 Low), a break below could take it near at 106.62 (September 6 Low).
GBP/USD: Sterling steadied above the 1.2200 handle on reports of a breakthrough on the Irish backstop. On Wednesday, The Times newspaper said Brussels was prepared to offer a mechanism for the Northern Irish assembly to leave a new backstop after a number of years. However, the upside appears limited as the Northern Irish party said it would emphatically oppose a reported European Union concession on the Irish backstop under any Brexit deal. The major traded 0.2 percent up at 1.2224, having hit a low of 1.2195 on Tuesday, it’s lowest since September 4. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2285 (10-DMA), a break above could take it near 1.2364 (21-DMA). On the downside, support is seen at 1.2154 (August 28 Low), a break below targets 1.2108 (August 22 Low). Against the euro, the pound was trading flat at 89.87 pence, having hit a low of 89.99 on Tuesday, it’s lowest since Sept. 9.
AUD/USD: The Australian dollar rallied, halting a 3-day losing streak, after a survey showed consumer inflation expectations for October rose 3.6 percent from prior month's 3.1 percent, surpassing projections of 3.2 percent gain. The major was also strengthened by data that showed domestic approvals for new home loans jumped for a second consecutive month in August, in a sign that recent rate cuts and easier lending rules were boosting the housing market. The Aussie trades 0.3 percent up at 0.6744, having hit a low of 0.6710 earlier, it’s lowest since October 3. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6687, a break below targets 0.6635. On the upside, resistance is located at 0.6799 (August 21 High), a break above could take it near 0.6803 (September 25 High).
NZD/USD: The New Zealand dollar rose after tumbling to a 1-week low earlier in the day as Chairman Jerome Powell flagged openness to further rate cuts. The Kiwi trades 0.4 percent up at 0.6317, having touched a low of 0.6277 earlier, its lowest level since October 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6348 (September 25 High), a break above could take it near 0.6391 (September 16 High). On the downside, support is seen at 0.6255, a break below could drag it below 0.6219.
Equities Recap
Asian shares gained on a report that China could yet agree to a partial trade deal with the United States despite recent tensions.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.
Tokyo's Nikkei gained 0.5 percent to 21,551.98 points, Australia's S&P/ASX 200 index rallied 0.5 percent to 6,547.10 points and South Korea's KOSPI surged 0.9 percent to 2,028.16 points.
Shanghai composite index rose 0.7 percent to 2,946.57 points, while CSI 300 index traded 0.7 percent up at 3,872.76 points. Hong Kong’s Hang Seng traded 0.4 percent higher at 25,780.91 points.
Commodities Recap
Crude oil prices consolidated on concerns of lower fuel demand as talks this week between the United States and China are not expected to help end the trade war between them, adding to anxieties about the global economy. International benchmark Brent crude was trading flat at $58.22 per barrel by 0521 GMT, having hit a low of $57.13 last week, its lowest since August 7. U.S. West Texas Intermediate was trading 0.1 percent lower at $52.53 a barrel, after falling as low as $51.39 earlier, its lowest since October 3.
Gold prices rallied to a 1-week peak as diminishing hopes of progress at the ongoing U.S.-China trade talks prompted investors to seek safety in safe-haven assets. Spot gold rose 0.1 percent to $1,516.96 per ounce by 0537 GMT, having touched a high of $1,516.96 earlier, its highest since October 3. U.S. gold futures gained 0.3 percent to $1,516.50.
Treasuries Recap
The Japanese government bond prices fell slightly, with the benchmark 10-year JGB futures falling 0.02 point to 155. The 10-year JGB yield fell 1 basis point to minus 0.220 percent. The 20-year JGB yield rose 0.5 basis point to 0.205 percent. The 30-year JGB yield also rose 1 basis point to 0.385 percent. The five-year yield rose 1 basis point to minus 0.350 percent. At the short end of the yield curve, the two-year JGB yield rose 1 basis point to minus 0.315 percent.
The Australian government bonds traded lower as markets are hopeful of a resolution from the U.S.-China trade talks scheduled to be held later today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, climbed 1 basis point to 0.898 percent, the yield on the long-term 30-year bond surged nearly 1-1/2 basis points to 1.497 percent while the yield on short-term 2-year traded flat at 0.638 percent.