Asia Markets Update On February 20th, 2020

Asia Markets Update On February 20th, 2020

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Aussie near 11-year low as jobs data disappoint, greenback rallies to multi-year peak on stronger risk appetite, Asian shares surge - Thursday, February 20th, 2020.

Market Roundup

  • Gold eases from 7-year peak
  • Oil rises on supply worries
  • Australian jobless rate jumps to 5.3%

Economic Data Ahead

  • (0430 ET/0930 GMT) UK Retail Sales ex-Fuel (MoM) (Jan)
  • (0430 ET/0930 GMT) UK Retail Sales ex-Fuel (YoY) (Jan)
  • (0430 ET/0930 GMT) UK Retail Sales (YoY) (Jan)
  • (0430 ET/0930 GMT) UK Retail Sales (MoM) (Jan)

Key Events Ahead

  • (0530 ET/1030 GMT) ECB's De Guindos speech

FX Beat

DXY: The dollar index advanced to a fresh near 3-year peak, supported by strong U.S. data and minutes of the Federal Reserves’ last policy meeting, which showed cautious optimism on the economy. Data released yesterday showed U.S. homebuilding fell less than expected in January, while permits surged to a near 13-year high. Moreover, producer prices last month increased by the most in more than one year. The greenback against a basket of currencies traded 0.2 percent up at 99.81, having touched a high of 99.82 earlier, its highest since May 11.

EUR/USD: The euro declined, hovering towards a near 3-year low, weighed down by a survey showing weakening confidence in the German economy. The European currency traded down at 1.0796, having touched a low of 1.0782 on Wednesday, its lowest since May 2017. Investors’ attention will remain on a series of data from the Eurozone economies, European Central Bank's monetary policy meeting accounts and ECB Vice-president De Guindos' speech ahead of the U.S. unemployment benefit claims and Fed Barkin's speech. Immediate resistance is located at 1.0837, a break above targets 1.0873 (10-DMA). On the downside, support is seen at 1.0767, a break below could drag it below 1.0743.

USD/JPY: The dollar rose, hovering closer to a 9-1/2 month peak hit in the prior session after China reported another decline in new coronavirus cases and on expectations of Chinese stimulus to counter a slowdown in growth. The major was trading 0.1 percent up at 111.43, having hit a high of 111.59 on Wednesday, its highest since May 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S.  unemployment benefit claims and Fed Barkin's speech. Immediate resistance is located at 111.69, a break above targets 111.99. On the downside, support is seen at 111.06, a break below could take it near at 110.84.

GBP/USD: Sterling slumped to a 1-1/2 week low after a senior EU advisor on Wednesday stated that the bloc will determine Britain's access to its financial markets in the same way it has for Japan and the United States and won't give special treatment. The major traded 0.1 percent down at 1.2907, having hit a low of 1.2900 earlier, it’s lowest since Feb. 11. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2963 (10-DMA), a break above could take it near 1.3000 (5-DMA). On the downside, support is seen at 1.2882, a break below targets 1.2844. Against the euro, the pound was trading flat at 83.59 pence, having hit a high of 82.81 on Tuesday, it’s highest since Dec.13.

AUD/USD: The Australian dollar slumped to a near 11-year trough as data showed domestic unemployment rate jumped by more than expected in January from nine-month lows, bolstering expectations of further monetary policy stimulus. Australia's unemployment rate jumped to 5.3 percent as more people went looking for work. The Aussie trades 0.5 percent down at 0.6646, having hit a low of 0.6630 earlier, 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 0.6600, a break below targets 0.6585. On the upside, resistance is located at 0.6722 (78.6% retracement of 0.6750 and 0.6630), a break above could take it near 0.6745.

NZD/USD: The New Zealand dollar tumbled to an over 3-month low as the greenback surged after the Fed minutes showed policymakers cautiously optimistic about holding interest rates steady despite risks caused by the coronavirus outbreak. The Kiwi trades 0.5 percent down at 0.6355, having touched a low of 0.6352 earlier, its lowest level since Nov. 13. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6418 (10-DMA), a break above could take it near 0.6475 (21-DMA). On the downside, support is seen at 0.6338, a break below could drag it below 0.6305.

Equities Recap

  • Asian shares gained after China reported another decline in new coronavirus cases, while PBoC cut its benchmark lending rate.
  • MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
  • Tokyo's Nikkei surged 0.3 percent to 23,479.15 points, Australia's S&P/ASX 200 index rose 0.3 percent to 7,162.50 points and South Korea's KOSPI declined 0.7 percent to 2,195.50 points.
  • Shanghai composite index rose 1.8 percent to 3,030.15 points, while CSI 300 index traded 2.3 percent up at 4,144.66 points.
  • Hong Kong’s Hang Seng traded 0.2 percent lower at 27,588.87 points. Taiwan shares shed 0.3 percent to 11,725.09 points

Commodities Recap

  • Crude oil prices surged to a 3-week peak as the market worried about crude supply disruptions and demand concerns were cushioned after a sharp drop in new coronavirus cases at the epicentre of the outbreak. International benchmark Brent crude was trading 0.1 percent higher at $59.36 per barrel by 0558 GMT, having hit a high of $59.69 earlier, its highest since Jan. 29. U.S. West Texas Intermediate was trading 0.5 percent up at $53.78 a barrel, after rising as high as $54.08 earlier, its highest since Jan. 29.
  • Gold prices declined after rising to their highest in nearly seven years in the previous session, as safe-haven demand took a hit after a dramatic drop in new coronavirus cases and on expectations that China will continue to shore up its economy. Spot gold was trading 0.1 percent down at $1,609.74 per ounce by 0603 GMT, having touched a high of $1612.98 on Wednesday, its highest since March 25, 2013. U.S. gold futures remained unchanged at $1,612.40.

Treasuries Recap

The Australian bonds surge as January disappointing employment data has strengthened the prospects for Reserve Bank of Australia interest rate cut. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, declined 6 basis points to 0.986 percent, the yield on the long-term 30-year bond also plunged 6 basis points to 1.586 percent and the yield on short-term 2-year dipped 5 basis points to 0.704 percent.

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