Asia Markets Update September 26th, 2019

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Asia Markets Update September 26th, 2019

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Kiwi rebounds on RBNZ governor adrian orr's comments, Aussie consolidates near 3-week low as RBA likely to cut interest again, Asian shares plunge - Thursday, September 26th, 2019.

Market Roundup

  • RBNZ Governor: unlikely to need unconventional monetary policy tools
  • RBA likely to follow global rates
  • Oil falls on surprise U.S. crude build

Economic Data Ahead

  • (0400 ET/0800 GMT) EZ private loans YoY August
  • (0400 ET/0800 GMT) EZ M3 money supply 3M August
  • (0400 ET/0800 GMT) EZ M3 money supply YoY August
  • (0400 ET/0800 GMT) EZ economic bulletin

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index slightly eased after rising to a 2-week peak in the prior session on renewed hopes for a trade deal after Trump stated that the U.S. and China were having good conversations and that an agreement could happen sooner than expected.  The greenback against a basket of currencies traded 0.1 percent down at 98.94, having touched a high of 99.06 on Wednesday, its highest since September 12.

EUR/USD: The euro steadied after falling to a near 2-week low in the previous session on this week's downbeat PMI data that fuelled recession worries, pushing a key market gauge of eurozone inflation expectations to a 3-week low below 1.2 percent. The European currency traded 0.2 percent up at 1.0997 having touched a low of 1.0942 on Wednesday, its lowest since September 12. Investors’ attention will remain on European Central Bank President Draghi's speech, ahead of the U.S. unemployment benefit claims, gross domestic product, wholesale inventories, good trade balance, personal consumption expenditures, pending home sales and Fed officials' speeches  Immediate resistance is located at 1.1059 (September 10 High), a break above targets 1.1074 (September 17 High). On the downside, support is seen at 1.0950, a break below could drag it below 1.0927 (September 12 High).

USD/JPY: The dollar eased after rallying in the prior session on signs of a rebound in the U.S. housing market after data showed August sales of new single-family homes rose more than expected. However, the downside is limited as investors welcomed U.S. President Donald Trump’s hints of progress toward a trade deal with China. The major was trading 0.2 percent down at 107.66, having hit a low of 107.04 on Tuesday, its lowest since September 9. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, gross domestic product, wholesale inventories, good trade balance, personal consumption expenditures, pending home sales and Fed officials' speeches  Immediate resistance is located at 108.08 (September 20 High), a break above targets 108.53 (July 1 High). On the downside, support is seen at 107.26 (21-DMA), a break below could take it lower at 106.76 (September 6 Low).

GBP/USD: Sterling steadied after tumbling to a near 2-week low in the previous session on concerns that Britain was unlikely to leave the European Union without a deal by October 31 and other risks including a split parliament and an early general election. The major traded 0.2 percent up at 1.2363, having hit a high of 1.2585 on Friday, it’s highest since July 5. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2449 (5-DMA), a break above could take it near 1.2526 (September 17 High). On the downside, support is seen at 1.2306 (September 10 Low), a break below targets 1.2279 (September 6 Low). Against the euro, the pound was trading 0.05 percent down at 88.58 pence, having hit a high of 87.85 on Friday, it’s highest since May 22.

AUD/USD: The Australian dollar consolidated near a 3-week low after Reserve Bank of Australia governor Philip Lowe signalled he is preparing to cut interest rates again, possibly as early as Tuesday. The Aussie trades traded flat at 0.6750, having hit a low of 0.6739 on Wednesday, it’s lowest since September 3. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6732 (August 28 Low), a break below targets 0.6706 (August 30 Low). On the upside, resistance is located at 0.6775 (5-DMA), a break above could take it near 0.6804 (21-DMA).

NZD/USD: The New Zealand dollar rose, having tumbled from a 1-week low in the previous session after Reserve Bank of New Zealand Governor Adrian Orr said that it was unlikely the central bank would need to use unconventional monetary policy tools. The Kiwi trades 0.4 percent up at 0.6294, having touched a high of 0.6348 on Wednesday, its highest level since September 18. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6362 (September 18 High), a break above could take it near 0.6398 (August 27 Low). On the downside, support is seen at 0.6255, a break below could drag it below 0.6210.

Equities Recap

  • Asian shares declined as optimism for a quick resolution to the U.S.-China trade war faded following Trump’s repeated mixed messages about trade negotiations.
  • MSCI's broadest index of Asia-Pacific shares outside Japan nudged down 0.1 percent.
  • Tokyo's Nikkei gained 0.1 percent to 22,048.24 points, Australia's S&P/ASX 200 index declined 0.5 percent to 6,677.60 points and South Korea's KOSPI surged 0.05 percent to 2,074.52 points.
  • Shanghai composite index fell 0.9 percent to 2,929.43 points, while CSI 300 index traded 0.8 percent down at 3,841.20 points.
  • Hong Kong’s Hang Seng traded 0.1 percent lower at 25,936.80 points. Taiwan shares shed 0.05 percent to 10,871.99 points.

Commodities Recap

  • Crude oil prices declined after U.S. crude stockpiles unexpectedly rose and as Saudi Arabia maintained a faster-than-expected recovery of its oil production. International benchmark Brent crude was trading 0.2 percent down at $62.40 per barrel by 0454 GMT, having hit a low of $61.21 on Wednesday, its lowest since September 16. U.S. West Texas Intermediate was trading 0.2 percent lower at $56.56 a barrel, after falling as low as $55.62 on Wednesday, its lowest since September 16.
  • Gold prices nudged higher as investors resorted to bargain-hunting after a sharp decline in the previous session. Spot gold was trading 0.4 percent higher at $1,509.87 per ounce by 0459 GMT, having touched a low of $1,500.34 on Wednesday, its lowest since September 20. U.S. gold futures were up 0.2 percent at $1,515.9 per ounce.

Treasuries Recap

  • The mid-to-long dated Japanese government bond yields rose after the central bank reduced purchases of the JGBs maturing in five to ten years. The benchmark 10-year JGB futures fell 0.10 point to 155.24. The 10-year cash JGB yield rose 1.5 basis points to minus 0.245 percent. At the shorter end of the curve, the two-year yield rose 1.5 basis points to minus 0.330 percent, while the five-year yield rose 1.5 basis points to minus 0.370 percent. In the super-long zone, the 20-year yield fell half a basis point to 0.170 percent and the 30-year yield fell one basis point to 0.345 percent, while the 40-year yield was flat at 0.420 percent.
  • The Australian government bonds suffered during Asian session Thursday tracking a similar movement in the U.S. Treasuries even as President Donald Trump faced an impeachment inquiry, although it appeared to be less controversial than investors had thought, thus forcing them to shift back to riskier equities, weighing on bond prices. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged nearly 1 basis point higher to 0.964 percent, the yield on the long-term 30-year bond hovered around 1.568 percent and the yield on short-term 2-year slipped 1 basis point to too traded flat at 0.744 percent.

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