Asia Markets Update On February 12th, 2020

Asia Markets Update On February 12th, 2020

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Kiwi rallies on rbnz's Hawkish stance, Dollar gains against Yen as new virus cases fall, Asian shares surge - Wednesday, February 12th, 2020

Market Roundup

  • Oil jumps amid slowdown in new China coronavirus cases
  • New Zealand central bank holds rates
  • RBNZ surprises markets with upbeat outlook

Economic Data Ahead

  • (0500 ET/1000 GMT) EZ Industrial Production w.d.a. (YoY) (Dec)
  • (0500 ET/1000 GMT) EZ Industrial Production s.a. (MoM) (Dec)

Key Events Ahead

(0450 ET/0950 GMT) ECB's Lane speech

FX Beat

DXY: The dollar index steadied after easing from a 4-month peak in the previous session after Federal Reserve Chair Jerome Powell told Congress the U.S. economy is in a good place, but cited the potential threat from the epidemic and concerns about the economy's long-term health. The greenback against a basket of currencies traded 0.1 percent up at 98.81, having touched a high of 98.95 on Tuesday, its highest since Oct. 10.

EUR/USD: The euro consolidated near a 4-month low amid concerns that the coronavirus outbreak will hurt economic growth. The European currency traded 0.05 percent down at 1.0911, having touched a low of 1.0891 on Tuesday, its lowest since October 1. Investors’ attention will remain on EZ industrial production abd ECB Lane's speech, ahead of Fed Chair Powell's testimony. Immediate resistance is located at 1.0950 (5-DMA), a break above targets 1.0976. On the downside, support is seen at 1.0884, a break below could drag it below 1.0839.

USD/JPY: The dollar surged, extending gains for the third straight session, buoyed by optimism that the spread of coronavirus had slowed. Across mainland China there were 2,015 new confirmed infections as of today, the lowest daily rise since Jan. 30. The major was trading 0.1 percent up at 109.83, having hit a high of 110.02 on Friday, its highest since Jan. 22. Investors’ will continue to track the broad-based market sentiment, ahead of Fed Chair Powell's testimony. Immediate resistance is located at 110.10, a break above targets 110.29. On the downside, support is seen at 109.54 (21-DMA), a break below could take it near at 109.36 (10-DMA).

GBP/USD: Sterling rose after British economic growth showed no change in the fourth quarter despite market expectations that it would be slower. Preliminary data for fourth-quarter gross domestic product showed the economy grew 1.1 percent year-on-year, the same as in the previous quarter. The major traded 0.1 percent up at 1.2963, having hit a low of 1.2872 on Monday, it’s lowest since Nov. 27. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3001 (10-DMA), a break above could take it near 1.3030 (21-DMA). On the downside, support is seen at 1.2935 (5-DMA), a break below targets 1.2894. Against the euro, the pound was trading 0.1 percent up at 84.17 pence, having hit a high of 84.16 earlier, it’s highest since Feb. 3.

AUD/USD: The Australian dollar surged after China reported its lowest daily number of new coronavirus cases since late January. China’s senior medical adviser stated that the number of new coronavirus cases was falling in some provinces and the outbreak might be over by April. The Aussie trades 0.2 percent up at 0.6730, having hit a low of 0.6662 on Friday, 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 0.6700, a break below targets 0.6662. On the upside, resistance is located at 0.6750, a break above could take it near 0.6774.

NZD/USD: The New Zealand dollar rallied to a near 1-week peak, after the Reserve Bank of New Zealand held rates at record lows, as expected, but sounded more optimistic on the economic outlook and dropped previous references to the chance of future cuts. The Kiwi trades 0.9 percent up at 0.6458, having touched a low of 0.6378 on Tuesday, its lowest level since November 15. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6484, a break above could take it near 0.6503. On the downside, support is seen at 0.6381, a break below could drag it below 0.6358.

Equities Recap

  • Asian shares rose amid hopes the worst of the coronavirus in China may have passed.
  • MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.
  • Tokyo's Nikkei gained 0.6 percent to 23,825.87 points, Australia's S&P/ASX 200 index rallied 0.5 percent to 7,088.20 points and South Korea's KOSPI surged 0.7 percent to 2,238.64 points.
  • Shanghai composite index rose 0.6 percent to 2,918.79 points, while CSI 300 index traded 0.6 percent up at 3,975.37 points.
  • Hong Kong’s Hang Seng traded 0.9 percent higher at 27,853.95 points. Taiwan shares added 0.9 percent to 11,774.19 points

Commodities Recap

  • Crude oil prices rose as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in China may begin to recover from the epidemic.  International benchmark Brent crude was trading 1.4 percent higher at $54.94 per barrel by 0503 GMT, having hit a low of $53.09 on Monday, its lowest since Jan 2019. U.S. West Texas Intermediate was trading 1.4 percent up at $50.61 a barrel, after falling as low as $49.46 on Monday, its lowest since Feb. 4.
  • Gold prices slightly edged lower as equities rose after the number of new coronavirus cases fell, easing uncertainty over the economic impact of the outbreak.
  • Spot gold was trading 0.1 percent lower at $1,565.81 per ounce by 0507 GMT, having touched a high of $1577.05 on Monday, its highest since Feb. 4. U.S. gold futures edged 0.1 percent higher to $1,571.20.

Treasuries Recap

The Australian bonds slumped during early trading hours, as investors started to find some mid-week respite following the improvement in Coronavirus situation, further affirmed by Federal Reserve Chair Jerome Powell’s speech, delivered late in the overnight session. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4-1/2 basis points to 1.086 percent, the yield on the long-term 30-year bond also surged 4-1/2 basis points to 1.675 percent and the yield on short-term 2-year gained nearly 3 basis points to trade at 0.776 percent.

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