Asia Markets Update On December 17th, 2019

Asia Markets Update On December 17th, 2019

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Aussie near 1-week low on rate cut speculation, Dollar consolidates against Yen as investors await U.S.-China trade details, markets eye UK unemployment data - Tuesday, December 17th, 2019.

Market Roundup

  • Gold steadies as U.S.-China trade uncertainty persists
  • Oil hovers near three-month high

Economic Data Ahead

  • (0400 ET/0900 GMT) Italy Trade Balance
  • (0430 ET/0930 GMT) UK ILO unemployment rate
  • (0500 ET/1000 GMT) EZ trade balance

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index declined, weighed down by caution over the future path of trade talks as investors sought more details on an interim trade deal the United States and China struck last week. The greenback against a basket of currencies traded 0.05 percent down at 97.10, having touched a low of 96.59 on Thursday, its lowest since July 1.

EUR/USD: The euro surged, extending previous session gains after data showed the bloc’s dominant service industry grew a bit faster, with the PMI rising to a 4-month high of 52.4 from 51.9, above the expectations of 52.0. The European currency traded 0.05 percent up at 1.1147, having touched a high of 1.1199 on Friday, its highest since August 13. Investors’ attention will remain on a series of data from the eurozone economies and EZ trade balance, ahead of the U.S. housing starts, building permits, JOLTS Job opening, industrial production, capacity utilization and Fed Eric Rosengren's speech. Immediate resistance is located at 1.1171, a break above targets 1.1223. On the downside, support is seen at 1.1106, a break below could drag it below 1.1083.

USD/JPY: The dollar rose, extending gains for the fourth straight session, as risk sentiment improved after the phase one U.S.-China trade deal led to the suspension of further U.S. tariffs on $160 billion of Chinese imports that were scheduled to take effect on Sunday. Investors now await the Bank of Japan’s policy meeting later in the week, where it is expected to dial back its massive stimulus. The major was trading 0.05 percent up at 109.56, having hit a high of 109.70 on Friday, its highest since Dec. 2. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing starts, building permits, JOLTS Job opening, industrial production, capacity utilization and Fed Eric Rosengren's speech. Immediate resistance is located at 109.72, a break above targets 109.92. On the downside, support is seen at 109.33, a break below could take it near at 109.08 (5-DMA).

GBP/USD: Sterling eased below the 1.3300 handle on reports UK Prime Minister Boris Johnson was seeking a hard line on Britain’s transition period after Brexit. The UK broadcaster ITV reported that Johnson’s revised Withdrawal Agreement Bill would require the United Kingdom to have arrangements to leave the European Union be in place by December 31 next year. The major traded 0.3 percent down at 1.3289, having hit a high of 1.3514 on Friday, it’s highest since May 2018. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3350, a break above could take it near 1.3422. On the downside, support is seen at 1.3169 (10-DMA), a break below targets 1.3107. Against the euro, the pound was trading 0.4 percent up at 83.87 pence, having hit a high of 82.75 on Friday, it’s highest since July 2016.

AUD/USD: The Australian dollar plunged to a near 1-week low on a downbeat tone from the Reserve Bank of Australia. The minutes of RBA's December policy meeting showed the policymakers opened the door to another cut in interest rates as early as February on concerns that wage growth was too weak to revive either inflation or consumption. The Aussie trades 0.3 percent down at 0.6866, having hit a high of 0.6938 on Friday, it’s highest since July 26. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6847, a break below targets 0.6823. On the upside, resistance is located at 0.6898, a break above could take it near 0.6913.

NZD/USD: The New Zealand dollar consolidated below the 0.6600 handle, as investors await further details on the U.S.-China trade agreement. The Kiwi trades down at 0.6590, having touched a high of 0.6635 on Friday, its highest level since July 29. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6645, a break above could take it near 0.6689. On the downside, support is seen at 0.6561 (10-DMA), a break below could drag it below 0.6528.

Equities Recap

  • Asian shares surged as a preliminary U.S.-China trade deal pointed to stronger world growth.
  • MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.1 percent.
  • Tokyo's Nikkei rallied 0.5 percent to 24,063.92 points, Australia's S&P/ASX 200 index fell 0.05 percent to 6,847.30 points and South Korea's KOSPI rose 1.1 percent to 2,191.83 points.
  • Shanghai composite index surged 1.3 percent to 3,022.24 points, while CSI 300 index traded 1.4 percent up at 4,042.17 points.
  • Hong Kong’s Hang Seng traded 1.2 percent higher at 27,842.13 points. Taiwan shares added 1.05 percent to 12,062.67 points.

Commodities Recap

  • Crude oil prices steadied near a 3-month high hit in the previous session amid hopes that a fully fledged U.S.-China trade deal is on the way and set to stoke oil demand in the world’s biggest economies.  International benchmark Brent crude was trading flat at $65.32 per barrel by 0507 GMT, having hit a high of $65.77 on Friday, its highest since September 17. U.S. West Texas Intermediate was trading 0.05 percent up at $60.16 a barrel, after rising as high as $60.45 on Friday, its highest since September 17.
  • Gold prices surged, extending gains for the third straight session as differing views of Chinese and U.S. officials on the interim trade deal announced last week kept investors on the sidelines. Spot gold was trading 0.1 percent up at $1,477.08 per ounce by 0509 GMT, having touched a high of $1486.62 on Thursday, its highest since November 7. U.S. gold futures were flat at $1,480.20.

Treasuries Recap

  • The Japanese government bond futures trimmed ahead of a Bank of Japan policy meeting that ends on Thursday. The benchmark 10-year JGB futures fell 0.10 point to 152.22. The 10-year JGB yield rose 1.5 basis points to minus 0.015 percent. The 20-year JGB yield fell 0.5 basis point to 0.275 percent. The 30-year JGB yield fell 1 basis point to 0.395 percent, but the 40-year JGB yield rose 1 basis point to 0.435 percnt. In the middle of the yield curve, the five-year yield rose 1.5 basis points to minus 0.115 percent. At the short end, the two-year JGB yield rose 0.5 basis point to minus 0.130 percent.
  • The Australian government bond futures were mixed, with the three-year bond contract up 2 ticks at 99.295. The 10-year contract eased half a tick to 98.83.
  • The New Zealand government bonds were a tad lower, sending yields about 2-3 basis points higher across the curve.
  • The Canadian government bond prices were lower across a steeper yield curve. The two-year fell 6.5 Canadian cents to yield 1.694% and the 10-year was down 47 Canadian cents to yield 1.631 percent.

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