Asia Markets Update On February 17th, 2020

Asia Markets Update On February 17th, 2020

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Antipodeans await coronavirus clarity, Euro consolidates near 3-year low on growth concerns, Asian shares nudge higher - Monday, February 17th, 2020.

Market Roundup

  • Gold holds near two-week high
  • Oil prices ease on uncertainty over virus impact

Economic Data Ahead

  • (0500 /1000 GMT) EZ Construction Output w.d.a (YoY) (Dec)
  • (0500 /1000 GMT) EZ Construction Output s.a (MoM) (Dec)

Key Events Ahead

  • (0600 ET/1100 GMT) ECB's Lane speech

FX Beat

DXY: The dollar index stood near a 4 1/2-month high hit in the previous session after the U.S. Federal Reserve had flagged concerns regarding the potential impact of the epidemic on the U.S. economy.  The greenback against a basket of currencies traded flat at 99.14, having touched a high of 99.17 on Friday, its highest since Oct. 8.

EUR/USD: The euro held near 3-year low as concerns mounted about weakening economic growth in Europe amid a new threat to the global economy from a fast-spreading coronavirus in China. Data released on Friday showed the German economy stagnated in the fourth quarter due to weaker private consumption and state spending, renewing fears of a recession. The European currency traded 0.1 percent up at 1.0839, having touched a low of 1.0827 on Friday, its lowest since May 2017. Investors’ attention will remain on EZ  construction output, as U.S. markets remain shut on account of President's Day. Immediate resistance is located at 1.0873 (5-DMA), a break above targets 1.0924. On the downside, support is seen at 1.0819, a break below could drag it below 1.0803.

USD/JPY: The dollar nudged higher as investors expect growth in the United States to remain strong, although data published on Friday provided a mixed picture. U.S. core retail sales was flat in January, while industrial production shrank more than expected by 0.3 percent. The Japanese yen is likely to remain on the downside as data showed Japan's economy shrank at the fastest pace in the December quarter since the second quarter of 2014. The major was trading 0.05 percent up at 109.84, having hit a high of 110.13 on Wednesday, its highest since Jan. 21. Investors’ will continue to track the broad-based market sentiment, as U.S. markets remain closed for a public holiday. Immediate resistance is located at 110.02, a break above targets 110.17. On the downside, support is seen at 109.52 (21-DMA), a break below could take it near at 109.30.

GBP/USD: Sterling steadied near a 2-week peak hit last week amid expectations that the new British finance minister would unveil a more expansionary budget next month. The major traded flat at 1.3043, having hit a high of 1.3069 on Thursday, it’s highest since Feb. 3. Investors’ attention will remain on the trade negotiations, amid lack of U.S. fundamental drivers. Immediate resistance is located at 1.3070, a break above could take it near 1.3105. On the downside, support is seen at 1.3001, a break below targets 1.297. (10-DMA). Against the euro, the pound was trading 0.1 percent down at 83.09 pence, having hit a high of 82.95 on Thursday, it’s highest since Dec.13.

AUD/USD: The Australian dollar rose, halting a 2-day losing streak, supported by expectations of stimulus from Beijing. Investors continue to assess the latest reading on coronavirus cases in China’s Hubei Province, the epicenter of the outbreak. The Aussie trades 0.3 percent up at 0.6729, having hit a high of 0.6750 last week, it’s highest since Feb. 6. Immediate support is seen at 0.6700, a break below targets 0.6682. On the upside, resistance is located at 0.6750, a break above could take it near 0.6774.

NZD/USD: The New Zealand dollar consolidated within narrow ranges as investors awaited some clarity on whether the coronavirus was being contained or not, while Reserve Bank of New Zealand's switch to a neutral stance offered some support.  The Kiwi trades flat at 0.6431, having touched a low of 0.6378 on Tuesday, its lowest level since November 15. Immediate resistance is located at 0.6484, a break above could take it near 0.6503. On the downside, support is seen at 0.6397, a break below could drag it below 0.6368.

Equities Recap

  • Asian shares nudged up as Chinese efforts to cushion the blow from a coronavirus outbreak supported investor sentiment.
  • MSCI's broadest index of Asia-Pacific shares outside Japan edged higher.
  • Tokyo's Nikkei declined 0.7 percent to 23,523.24 points, Australia's S&P/ASX 200 index eased 0.1 percent to 7,125.10 points and South Korea's KOSPI fell 0.1 percent to 2,242.17 points.
  • Shanghai composite index rose 2.2 percent to 2,980.76 points, while CSI 300 index traded 2.2 percent up at 4,073.52 points.
  • Hong Kong’s Hang Seng traded 0.6 percent higher at 27,976.17 points. Taiwan shares shed 0.4 percent to 11,763.51 points

Commodities Recap

  • Crude oil prices edged lower from 2-week peak as investors brace for economic data in Asia due this week that should give a reading on how China’s coronavirus epidemic has affected oil demand. International benchmark Brent crude was trading 0.3 percent lower at $57.17 per barrel by 0523 GMT, having hit a high of $57.52 on Friday, its highest since Jan. 31. U.S. West Texas Intermediate was trading 0.13 percent down at $52.04 a barrel, after rising as high as $52.25 earlier, its highest since Jan 31.
  • Gold prices eased from 2-week highs scaled in the previous session on uncertainty over the impact of the coronavirus outbreak on the global economy. Spot gold was trading 0.05 percent at $1,583.23 per ounce by 0540 GMT, having touched a high of $1585.08 on Friday, its highest since Feb. 3. U.S. gold futures eased by 0.1 percent to $1,585.40.

Treasuries Recap

The Australian bonds edged tad higher during morning hours of the first trading day of the week ahead of the Reserve Bank of Australia’s (RBA) February monetary policy meeting minutes, scheduled to be released on February 18 by 00:30GMT and the country’s labour market report for the month of January, due on February 20. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped nearly 1/2 basis point to 1.069 percent, the yield on the long-term 30-year bond also fell 1 basis point to 1.672 percent and the yield on short-term 2-year remained nearly flat at 0.762 percent.

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